Although the current electric vehicle (EV) market segment is 1 to 2 percent of the total vehicle sales worldwide, the anticipated growth is massive. Recent projections show that EV sales are expected to surpass those of traditional vehicles by 2038, while the global fleet of EVs is expected to surpass one billion by 2047. Almost 1 in 2 passenger cars sold in Norway in 2018 were EVs. In fact, EVs make up nearly half the market in Norway. The tipping point for Norway was in 2014, when the country started to see decline in sales of combustion engine vehicles. Globally, China is winning the electric vehicle race. In 2018, nearly 1.3 million energy vehicles (EVs and plug-in hybrids) were sold in China, a 62 percent increase from 2017 -- as of September 2018, there were only four million EVs in use across the globe. According to the World Economic Forum, the global EV market is growing exponentially, increasing six folds since 2013 to 2015.
US EV sales surpassed 2 percent of new car sales in 2018. According to research, the 2 percent milestone in the US comes from two factors: "Delivery of nearly 140,000 Tesla Model 3s and California residents' continued appetite for EVs, which will likely account for about 53 percent of US EV sales. About half of US states still have EV sales shares of less than 1 percent, while California approaches 10 percent," per Clean Technica.
To learn more about the electronic vehicle (EV) market and Tesla, Ray Wang, CEO and founder of Constellation Research, and I recently interviewed Tasha Keeney on our weekly show DisrupTV. Keeney, an industrial innovations strategy analyst at ARK Invest, primarily covers autonomous cars, additive manufacturing, infrastructure development, and innovative materials. Keeney's work and research findings has been featured on all major media outlets and publications. ARK is a leading investment manager focused on disruptive innovation that is changing the way the world works. ARK believes innovation is key to growth. ARC is focusing solely on disruptive innovation and investing in leaders, enablers, and beneficiaries of disruptive technologies. Keeney and Catherine D. Wood, CEO and chief investment officer of ARK Invest, recently sat down with Elon Musk to discuss EV market trends and innovations.
- ARK has estimated that Tesla is 3 years ahead of peers like Nvidia in autonomous hardware, given the specs of the custom chip it released late last year.
- Elon Musk said that Tesla started building the chip (Tesla Autopilot artificial intelligence (AI) supercomputer) three years ago, and that it will enable a 2000 percent improvement over the Nvidia system it will replace.
- ARK estimates that EV sales could reach 26 million by 2023, up from 1.3 million in 2018, if battery production scales accordingly.
- Tesla alone should be able to boost its production from roughly 240,000 cars last year to 1.5 million in 2021 and three million in 2023.
- Tesla Autopilot will be "feature-complete" for self-driving by the end of 2019, per Elon Musk.
- By year-end 2020, Tesla drivers will be able to relinquish all responsibility to Autopilot and fall asleep while being transported from point to point, pending regulatory approval, per Elon Musk.
- Tesla vehicles equipped with first and second-generation Autopilot hardware have collected a cumulative 8 billion miles to date, while Waymo's vehicles had collected roughly 10 million miles as of October of 2018.
- Even if autonomous driving were to take twice as long to adopt than ARK anticipates, commercializing in 2021 instead of our original 2019 estimate, equity markets should be valuing the opportunity at $1 trillion globally today, compared to ARK Invest's baseline estimate of $2 trillion.
Hera are some other interesting takeaways from our discussion with Keeney:
The EV market is $2 trillion market opportunity
ARK Invest estimates that an autonomous taxi could price profitability to a consumer at about 26 cents per mile. A personal car is about 70 cents a mile to drive, and autonomous taxis will cost 1/10th of a traditional taxi today. These savings and conveniences will translate to a $2 trillion dollar in equity market opportunity. There are few players in this space; Waymo, GM, Aptive, and Tesla.
- What is the Tesla Semi? Everything you need to know
- Top 5 reasons to buy a Tesla (CNET)
- Tesla's Autopilot: Cheat sheet (TechRepublic)
Exponential growth factor is hard to measure in the short term
ARK estimates that EV sales could reach 26 million by 2023, up from 1.3 million in 2018, if battery production scales accordingly. According to Keening, Tesla has very aggressive growth projection targets. She also reminded us that this is an exponential growth factor, which is hard to predict on a short-term basis. This means that we have to adopt a long-term view of growth milestones, as compared to measuring near-term monthly and quarterly goals.
The number of Tesla vehicles delivered per year:
2021: 1.5 million (projection per Elon Musk)
2023: 3 million (projection per Elon Musk)
Tesla "auto pilot" feature will be feature complete by end of 2019
ARK invest looks at a five-year window -- and the advantage will be with Tesla given multiple factors including battery production capabilities, autonomous hardware innovation, and consumer data analysis. According to Keening, based on her interview with Musk, by the end of 2019, Tesla cars equipped with auto pilot will be feature complete. Tesla will need more miles and data so that the driver can relinquish all driving responsibilities. Musk believes that by end of 2020, the car is fully autonomous. In the trucking space, which will embrace this level of innovation after taxis and personal cars, ARK believes there is need for more data, testing and understanding of urban roads, drop off and pick up data points. ARK believes autonomous trucks can be as cost competitive as rail.
Tesla is three years ahead of its competitors
ARK Invest believes that Tesla is ahead of its competitors by three years, in three areas:
- Battery production and efficiency: Both chemistry of battery pack management system and its scale with GigaFactory -- by end of 2019, Tesla will be the largest global producer of mobile batteries. According to Tesla, "To ramp production to 500,000 cars per year, Tesla alone will require today's entire worldwide supply of lithium-ion batteries. The Tesla Gigafactory was born out of necessity and will supply enough batteries to support Tesla's projected vehicle demand. Today, the Gigafactory produces Model 3 electric motors and battery packs, in addition to Tesla's energy storage products, Powerwall and Powerpack."
- Autonomous Hardware: Tesla began building its own chip three years ago. The spec of Tesla's chip is a massive improvement on the current chips. Tesla has developed an autonomous chip that is at least three years ahead of any other automotive manufacturer.
- Autonomous Data: Telsa has billions of miles of customer data, as compared to the second highest competitor with only tens of millions of customer data (an order of magnitude of more autonomous data with Tesla.
The multiplicative impact of having a three-year leadership lead across these three dimensions -- battery, hardware, and data -- translates to a potential lead that far exceeds three years. Will other car manufacturers build solutions on top of a Tesla platform? Keeney and Musk discussed partnership opportunities as long as it does not impact the innovation and R&D velocity of Tesla. ARK Invest believes that other EV manufacturers will have a very difficult time to catch up with Tesla and many may go out of business.
To learn more about the EV market and innovation opportunities with additive manufacturing and 3D printing in the consumer and enterprise business-to-business sectors, please watch our video conversation with Tasha Keeney.