Diffusion of innovation - along and up the S curve for electric vehicles
Diffusion of innovation - along and up the S curve for electric vehicles
The theory of diffusion of innovations was popularised by Everett Rogers in a book of the same name in 1962. Rogers argues that diffusion is the process by which an innovation is communicated over time among the participants in a social system.
The practical study of diffusion of innovations took off earlier in rural sociology in the midwestern United States in the 1920s and 1930s where researchers studied how farmers were adopting hybrid seeds and new equipment and techniques.
It’s now entered the technology lexicon, with the terminology of innovators and early adopters, motivated by curiosity and novelty and - right across the “chasm” - the early majority who are motivated more by ease and low cost.
Unsurprisingly, the take up of electric vehicles has been expected to follow the same diffusion theory-based process. On the supply side, EV technologies start slow and small - but as they scale up, the quality improves, costs fall and the industry grows. On the demand side, electric cars become more salient, normalised and eventually ubiquitous. Friends, neighbours and family members experience electric cars as passengers, drivers and ultimately owners. Eventually, dramatic improvement and cost reduction opportunities are exhausted, the cars are in widespread use with few remaining potential new customers, and markets become saturated.
This is the famous S-curve - starting slowly, and accelerating to peak steepness, before gradually slowing as it converges on 100% - in mathematical terms, a logistic function.
So when and where do EV sales follow a logistic “S” shape? Starting with developed markets in Europe, we can trace out an S curve for leading countries such as Denmark.
Monthly EV market share in Denmark and fitted S-curve to 2040
Denmark shows a good fit with the S-curve, and is on course to reach 80% EV sales during 2026.
We might expect the S-function to hold in a stable system which is free of disruption or disturbance from external conditions. However what happens if there are sharp changes in policies or incentives?
Monthly EV market share in Italy and Germany and fitted S-curves to 2040
Italy’s withdrawal of incentives in late 2021 and the lack of any replacement scheme until May 2022 pushed sales off an S-curve that was promising enough to vie even with Scandinavian countries. Whilst some incentives have been in place continuously since, public confidence has not recovered - not helped of course, by misleading and inconsistent messages from Government Ministers. However the effort to impose an S-curve is somewhat fraught, seeming to mash up the period of earlier growth with today’s halting recovery to anticipate an imminent period of rapid growth which is desirable if not yet terribly likely.
Germany’s progress, meanwhile, is currently unclear. Repeated reductions in incentives - culminating in the withdrawal of all incentives without warning in December 2023 following its government’s defeat in a court case on public spending plans - has driven sales sharply down. It is unclear what adoption curve Germany is now on, or whether overtaking by the Italian market in 2026 is realistic. At any rate, Germany is now officially off track, and is not set to reach 80% EV market share until late 2034.
Turning to emerging markets, we can fit early trends onto an S-curve, but with less certainty about the medium-term future.
Monthly EV market share in India and Brazil and fitted S-curves to 2040
Both countries show a stunning rate of growth, catching up with Germany by 2025, and the UK and France by 2026. But battery electric vehicles account for less than 3% in both countries at the moment, meaning they are exceptionally early in their S-curve. Since we are only in the foothills of the curve, the uptake is extremely sensitive to changes in the economic environment. So it is quite possible that, with the addition of a few more monthly data points, we will need to revise the near-vertical take-off downwards.
This blog has shown that some markets are following a plausible S-curve, and are well on track to reach 80% battery electric sales by 2030. But countries where policy has yo-yoed show a much less good fit. And it’s harder to make a call about the pace of take up in emerging markets, where very little of the S-curve has yet been drawn.
You can reproduce these S-curves, and those for other countries using the dashboard made available with our Global EV Tracker, which is updated as soon as new data is available (usually one month in arrears).
The next blog turns to the UK and the twists and turns in its own BEV market share.