Many people of a certain age can recall the first time they held a smartphone. The devices were weird and expensive and novel enough to draw a crowd at parties. Then, less than a decade later, it became unusual not to own one.
That same society-altering shift is happening now with electric vehicles, according to a Bloomberg analysis of adoption rates around the world.
The U.S. is the latest country to pass what’s become a critical EV tipping point: 5% of new car sales powered only by electricity. This threshold signals the start of mass EV adoption, the period when technological preferences rapidly flip, according to the analysis.
For the past six months, the U.S. joined Europe and China — collectively the three largest car markets — in moving beyond the 5% tipping point. If the U.S. follows the trend established by 18 countries that came before it, a quarter of new car sales could be electric by the end of 2025. That would be a year or two ahead of most major forecasts.
Why is 5% so important?
Most successful new technologies — electricity, televisions, mobile phones, the internet, even LED lightbulbs — follow an S-shaped adoption curve. Sales move at a crawl in the early-adopter phase, then surprisingly quickly once things go mainstream. (The top of the S curve represents the last holdouts who refuse to give up their old flip phones.)
In the case of electric vehicles, 5% seems to be the point when early adopters are overtaken by mainstream demand. Before then, sales tend to be slow and unpredictable. Afterward, rapidly accelerating demand ensues.
It makes sense that countries around the world would follow similar patterns of EV adoption. Most impediments are universal: there aren’t enough public chargers, the cars are expensive and in limited supply, buyers don’t know much about them. Once the road has been paved for the first 5%, the masses soon follow.
Thus the adoption curve followed by South Korea starting in 2021 ends up looking a lot like the one taken by China in 2018, which is similar to Norway after its first 5% quarter in 2013. The next major car markets approaching the tipping point this year include Canada, Australia, and Spain.
© 2022 Bloomberg L.P.