Tesla and Electric Vehicle Sales are Defying S-Curve Adoption

Tesla Motors

Year over year electric vehicle (EV) sales growth is an astonishing achievement in the making. Research from disruptive tech wealth manager ARK Invest has found the electric vehicle market is defying S-Curve adoption and going parabolic.

In the typical product, brand, or segment life cycle, market adoption follows the S-Curve, named after the shape it forms on a graph. As the product penetrates its addressable market, sales growth decelerates. The graph it forms looks like this:

electric vehicles article s-curve graph ark invest

But electric vehicle market research compiled by Ark Invest finds that EVs in general, and especially Tesla, aren’t running out of steam. This suggests the addressable market for electric vehicles is much larger than analysts thought, and/or EVs are doing a good job of expanding and capturing more of the potential market.

Tesla Market Adoption Defies Gravity

Elon Musk’s other company, SpaceX isn’t the only one defying gravity. Even as the EV market has grown more than 10x its 2013 share of all automobiles, Tesla has increased its share of the segment. Tesla’s Q2 deliveries smashed expectations, breaking its previous quarterly record. The segment-leading EV automaker sent 95,000 Teslas over the curb busting bugs for the quarter, 4,200 more than markets had forecast.

tesla market share of battery electric vehicles graph source ark invest

Every Automaker Will Make EVs

Ark Invest has the numbers to show just how far global electric battery powered automobile sales have blown past expectations:

“Four years ago, the Energy Industry Administration (EIA) among other forecasting agencies estimated that EV sales would total a few hundred thousand units in the early 2020s. After they hit 1.45 million units in 2018, the same agencies now forecast that EV sales will increase to roughly 4-4.5 million in 2023, suggesting that their growth will decelerate from 79% last year to 25% at an annual rate during the next five years.”

The disruptive tech investor’s macro thesis for the EV market includes the eventuality that all automakers will shift to EV production as battery costs fall. According to a study by the University of Melbourne and IBM Research, several major financial companies project electric battery costs to fall by as much as 50% over the next decade:

electric battery cost projections

Investing in the Electric Vehicle Market

Tesla stock is one way to invest in the electric vehicle revolution. After a tough year that’s left its stock battered, there may never be a better time to get a bargain on TSLA.

In addition to its EV leadership, Tesla stock is a way to invest in autonomous vehicle technology. The world’s largest supplier of electric batteries that power cars is Panasonic. The Japanese electronics company announced a joint venture with Toyota earlier this year. China is home to two other of the world’s five largest suppliers of lithium ion batteries: Contemporary Amperex Technology and BYD Co Ltd.

Another macro hedge to protect your portfolio from losses to the electric vehicle market expansion is to reduce your exposure to oil stocks. Oil industry stocks are clearly already suffering from the EV and sustainable energy market’s growth, even as the U.S. becomes the world’s number one oil producer. As Barron’s reports:

The Wall Street Journal recently calculated that the stocks of a basket of oil and gas companies fell about 10% in the past decade, even as the S&P 500 nearly tripled. And a group of 40 independent oil and gas producers spent $200 billion more than they took in from operations.”

And even while Brent crude prices rose 20% this year, oil stocks are down to 4.5% market share of the S&P 500’s total market cap. That’s their lowest level since 2001. It may be time to trade in your Exxon stock for Tesla and Panasonic.

You can also give yourself a pat on the back and tell your family, friends, and followers on social media that you’re doing something good for the planet.

Featured image courtesy of Shutterstock.