The Math Equation that No-One Uses

Its called the “Logistics Function” or more commonly known as the “S” curve.

The Logistics Function is frequently used to illustrate the “rise and spread of new ideas”. Like disruptive new energy technologies such as Electric Vehicles (EV).

And like all disruptive technologies that occur in nature they follow a prescribed pattern of growth called the “S curve”.

The S curve is sensitive to fast and changing growth rates and commonly used to model disruptive technologies. Products that start out small, explode in demand, then level off as resources are depleted in a final maturing phase.

Unfortunately, almost all EV analysts assume EV demand will follow non-disruptive, simple growth curves. Like fixed rate growth called “Exponential Functions”. These work well on calculating interest on a bank account not forecasting the rise of Electric Vehicle demand.

 

Time for a reality check.

By 2020 or thereabouts, EVs are forecast to become cheaper than conventional internal combustion engines (ICE), and be 90% cheaper to maintain and run.

Bloomberg New Energy have declared that EVs could reach sales “lift-off” by 2022. However, their analysis uses a static growth curve, showing no disruption.

What happens if there is a mass exodus from fossil fuelled cars to electrified ones?

With smooth EV growth, peak demand occurs around 2025-6; with an S-curve, it arrives as quickly as 2021-22.

These are two different worlds: the smooth curve assumes lower demand and allows two decades to adapt, the S-curve predicts higher growth, and a sole focus on excellence in EVs.

Perhaps Tesla’s sky-high valuation for Electric Vehicle growth has a point?

Source: https://www.dollarsperbbl.com/2017/06/02/the-one-equation-that-describes-the-ev-revolution-that-no-one-uses/

 

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