Toyota Chairman Forecasting, EV Market Will Peak at Just 30%

EV market development and long term predictions - are there methods to validate that?

After a while of DYI home improvement projects, traveling around and joining some farmer protests for fun, showing my appreciation for the people who deliver my nourishment, I found some time, to watch some streaming videos and read some newspapers, when I came across recent headlines on mobility. Winter is the time, when I reflect on things, before outdoor and camping season starts over. Then, in March, my wife and I hit the road, trucking through eastern and southern Europe. Getting older, you want it warmer, trust me :-)

Anyway, I came across an article in the fortune magazine recently, where Toyota's chairman,? Mr. Akio Toyoda, expects electric vehicle (EV) market adoption to peak at just 30% (https://fortune.com/asia/2024/01/24/toyota-chairman-akio-toyoda-ev-skepticism-thirty-percent-battery-electric-cars/ )

That started my curiosity, so I stumbled into some YouTube videos, where Prof. Fritz Indra, an automotive industry legend, predicted that EVs might peak out at a market share of 15-20% in Europe (https://www.youtube.com/watch?v=oYNPD2j0YRw ).

He later refined his arguments in an interview of the German news outlet "Tichy's Einblick". The interview is remarkable, in aligning nicely with recent power shifts in the EU commission towards southern and eastern Europe, away from Germany and Netherlands in this very topic (https://www.youtube.com/watch?v=Jt1k2U3TO1Q ).

Both videos with Prof. Indra are German, however, you might use subtitles / closed captions and the auto-translation feature. English auto-translation works quite OK.

Recent headlines in major news outlets read like "the renaissance of the internal combustion engine (IC)", quite an interesting view point, since the IC engine was never dead. In 2022, SAE (Society of Automotive Engineers) predicted a stable and long term diesel engine production volume, despite EV trends.

Now to the main point: there might be a way to verify market developments to a certain degree of probability. After a major innovation, market developments start exponentially, however, this exponential part will not continue forever. In reality markets grow exponentially towards a maximum growth rate and then growth will slow down to a minimum, when market maturity is reached. This is represented by the "Gompertz function" (a.k.a. Gompertz Curve) (https://en.wikipedia.org/wiki/Gompertz_function ), which was found by Benjamin Gompertz in 1825. It represents a mathematical model for time series, where the growth percent is fastest at the start and slowest at the end.

The Gompertz Curve is successfully applied in market predictions of semiconductor industry, mobile phone uptake, population growth, market impact in finance and growth of tumors. This is quite a wide field of industries and science disciplines. It also counters futurists a little bit, who scare some fellows with disruption stories in order to motivate leadership to copy companies that are in the news. First you should be like Apple, then like Tesla, next maybe like Nvidia, whatever.

If you process market development figures of about 10-15 years and understand the growth function of the past, the application of the Gompertz function allows quite a solid prediction of future market developments and also a rough picture, where a market will plateau in the future. In the EV sector, there might be some data noise, like government subsidies, further innovations, however, this can be compensated for. The constant, on the other hand, is the theoretical energy density of lithium.

After more than 10 years of "Transform Something", or else, it might be time to take a step back, look at the whole picture, and think about refining strategies for the whole powertrain spectrum, leaving the political realm of the past, that only knew "black" vs. "white".

The same can be said about the energy transformation, and here speaks a little bit my past, when I was 30kg younger and worked as a young engineer for "Kraftwerksunion", being part of an engineering team that put Gundremmingen nuclear powerplant block B and C into operation.

The future will be technology diverse and open. Not planned economy, but a functioning market economy with fierce competition will create innovations that will solve any problem, mankind will face now and in the future. But it means also less bureaucracy and micromanagement by the state and more setting the framework where the competition will be unleashed.

I do not know, how electric mobility will look like in the far future, however, batteries will be seen as an episode towards something beyond our current imagination.

Now, this is an idea, so any comment is welcome and I am happy to learn from you all.