The readers of this blog know how many times I described the sigmoid curve (or S-shaped curve) which approximates the behaviour of technological innovation adoption.
The transition towards electric mobility is not entirely comparable to the of the mobile phone or the Internet, in that it’s really made up of two semi-transitions: the demise of the internal combustion engine coupled with the rise of the electrical powertrain. Ideally, the two curves should be exactly symmetrical, showing this behaviour:
As you can see, sales of IC cars are progressively replaced by sales of EV cars, but as a whole the market does not change.
Since we know that the sigmoid equation is characterized by three parameters, we can study what happens when we change each parameter separately from the others.
Being reality always a bit more complex than models, probably all three variations will occur at the same time, unleashing a so called “Osborne effect” which occurs every time the premature announcement of a newer successor to a product slows the sales of the old version, perceived as obsolete.
The chart representing this situation is nothing but the sum of the three preceding charts:
Obviously mathematical models are but a rough representation of reality, but in this case they help us assess the relative weight of the three cases, undestanding that the delay is the most dangerous of the three for the survival of OEMs and their retail network.
Moreover, I think the announced ban to the sales of ICE cars by 2035 recently mandated by the EU, will be largely “digested” by the market way before that date; if the experience of Norway is of any guidance, markets move way faster than legislators: the Nordic country had originally planned to phase-out fossil vehicles by 2025 but the most current forecasts say the last internal combustion car could be sold already before the end of 2022.
Sure, being ready in Norway (where fewer than 150,000 cars are sold each year) is an entirely different ball game than being ready in Germany, France or Italy or, worse still, in ALL these countries at the same time.
But the Osborne effect is unstoppable: those who won’t be ready won’t sell, and if nobody will be ready then the world may discover the same thing Italians discovered in the ’60, i.e. that buying a new car every 5 years is not mandatory, therefore slowing also the environmental benefit associated with the transition.
Those who care about the environment and those who care about the Automotive industry should focus all their strength to accelerate the transition because right now, delay kills.
OneWedge 