Anyone who has followed the technology industry will have come across the infamous Gartner Hype Cycle. This slightly tongue-in-cheek graph tracks the rise, fall, and rise again of new consumer technologies from inception through to wide adoption. Criticisms of the Hype Cycle’s objectivity aside, it’s clear that electric vehicles have been falling into the “Trough of Disillusionment” of late, where so many consumer technologies flounder (when was the last time you used your 3D TV, if ever?) The question is, will they recover to fully enter the mainstream?
First, it’s worth explaining how the Gartner Hype Cycle works, for those who are unfamiliar with it. The graph starts with a “Technology Trigger”, which for Electric Vehicles would probably be a combination of the Nissan Leaf, Renault Zoe and (in particular) the Tesla Model S. These vehicles showed that EVs could be everyday cars. In the case of the Model S, it went even further, revealing that EVs could be better than internal combustion (ICE) – faster, smoother, and with more advanced technology. They weren’t just green, they were aspirational.
After the arrival of the Tesla Model 3 in 2017, this car’s burgeoning sales convinced other brands to jump into electrification, such as Jaguar with the I-Pace, Audi with the e-tron, and Porsche with the Taycan. Startup brands including Lucid and Rivian arrived on the scene (although both had been around a while), and EVs became the “new thing”. Volkswagen Group unveiled a grand plan for its ID. range of cars. Manufacturers either had to consider switching to electric or face imminent destruction. The EV market was heading towards the “Peak of Inflated Expectations”. During the pandemic, the ever-increasing sales of EVs made it look like the format was going to take over fast. Considering the trajectory of battery prices in 2020, I expected EVs to hit price parity with ICE by 2023/24, particularly as the $25,000 Tesla arrived, followed by an exponential decline in fossil fuel vehicles from then onwards.
But that clearly hasn’t happened. In the UK, last month’s EV sales were disappointing. I’ve already addressed how “salary sacrifice” schemes make the majority of electric car purchases in the UK look like they are for fleets, when they are mostly for personal use. But there’s no denying that while sales still grew a little in March, their market share fell behind compared to this time last year. Globally, even Tesla had a tough quarter, with its deliveries down in Q1 for the first time in four years.
As I’ve pointed out more than once, there has been a lot of recent anti-EV journalism, with numerous articles about early adopters who have become tired of their electric cars and gone back to diesel. Generally, the subjects of these articles didn’t think their purchase through adequately and are now complaining about it for clicks. One particularly vociferous Porsche Taycan-owning YouTuber has been whining loudly about the loss in value of his car. In the UK, there are a lot of EVs in the top ten of most depreciating cars (but most notably the Jaguar I-Pace and Audi e-tron, both of which are arguably “last generation” technology). There are mitigating factors here, which I’ve discussed before, such as the initial price discounts not being considered when calculating price drops. But the biggest factor is undoubtedly that EVs started off too expensive, and they still are. The electric car has been entering the “Trough of Disillusionment”.
With the Gartner Hype Cycle, some technologies never escape from the Trough, for example for aforementioned 3D TVs, most of which have only ever been used in non-3D mode. But there are plenty of reasons why EVs won’t get stuck in the Trough and will surmount the “Slope of Enlightenment” to the “Plateau of Productivity”. Previous technologies that achieved this illustrious result include the Internet, which weathered the Dotcom Crash to become a ubiquitous and essential part of life. Smartphones arguably never even had a Trough, although there were several previously well-known names that missed the revolution and fell by the wayside.
EVs look likely to survive for several reasons, one of which is inertia. I asked SEAT Cupra CEO Wayne Griffiths at a recent roundtable about this. His company is the Spanish wing of the Volkswagen Group. “SEAT Cupra won’t be slowing down our rollout of EVs because we’ve already made the investments in electrification in Spain as a group,” he says. “Volkswagen has invested €10 billion together with SEAT in the development of the electric platform, the Small BEV, for Skoda, Volkswagen and Cupra, as well as electrifying the plants here in Spain, in Pamplona and Martorell, and building a battery plant in Valencia.”
“So we’re already all in,” says Griffiths. “We’re invested. Our focus is now not talking about slowing down, but exactly the opposite, speeding up. And we’re asking the governments in Europe to speed up on supporting the sales of electric cars by incentivizing consumers, telling consumers that this is part of the solution, part of the future, and getting the charging infrastructure in place that this is going to need.”
However, the slowdown in sales will need to be countered with more affordable EVs, such as the Small BEV platform Griffiths mentions, which is the one that was first unveiled in Volkswagen’s ID. 2all around this time last year. “The cars that the Volkswagen Group will manufacture on this mobile platform will start around €25,000, which is the price of the biggest sold car in Spain,” he says. “EVs did initially have a price problem, but that’s changing now and will change, particularly from 2025 onwards when we launch the Small BEV platform.”
The European manufacturers are already waking up to the need for cheaper EVs. For example, in the UK Vauxhall has slashed the starting price of its Mokka Electric by introducing a new Griffin trim level that is £7115 ($9,000) cheaper than previous models, for a starting price of £29,495 ($37,000). Ironically the fall in resale values for current electric cars entering the secondhand market will start to make them more affordable, too.
But the true challenge will be from China. BYD and CATL are expected to halve the prices of their Lithium Iron Phosphate (LFP) batteries by the end of 2024. CATL is the world’s largest battery manufacturer with 37.4% of the global market, and BYD’s battery division, FinDreams, is second with 25.7%, so together they control 63.1% of sales. These price drops will have a significant impact on the cost of EVs, particularly as LFP batteries are fast becoming the cell type of choice for lower cost entry-level models (and BYD’s own cars). The price pressures from China have even (allegedly) led Tesla to cancel its $25,000 car, although Musk has denied this on Twitter / X.
In other words, talk of the demise of the EV is somewhat premature. People are seeing the realities now, and we’re not so excited about electrification anymore that we’ll pay such a major premium to have the technology. But while price parity has been delayed, it’s coming (probably from China), and then EVs will be cheaper than ICE. After that, the cheaper running costs – both in terms of charging and less need for maintenance – will mean EVs will rise again, as we see them with more clarity. In the dominant EV markets of Europe and China, electric cars are still likely to be the majority vehicle purchase type by the end of the decade.
