Plug-in Vehicle Market Penetration
Plug-in electric vehicles (PEVs), such as plug-in hybrids and electric vehicles (EVs), are important components of our technology portfolio for achieving energy security and sustainability. However, the current market share for these vehicles is small. Obstacles to increasing market share include high vehicle cost, driving range limitations for EVs, charging availability, and limited vehicle choice, to name a few. Policy makers and stakeholders need a better understanding of the effect of these factors on market penetration in order to develop effective strategies to advance the commercial viability of these vehicles.
The Transportation Energy Evolution Modeling (TEEM) Program at Oak Ridge National Laboratory (ORNL) recently performed an analysis of the market share potential of plug-in hybrids and EVs to determine (1) the approximate distribution of PEV market shares in future years and (2) the key factors that affect market penetration. The study projected market share for plug-in hybrids and EVs from 2010 through 2050 by performing a Monte Carlo simulation using the Market Acceptance of Advanced Automotive Technologies (MA3T) model and @Risk®. Details of the study are described in How Uncertain is the Future of Electric Vehicle Market: Results from Monte Carlo Simulations Using a Nested Logit Model.
Projected Market Penetration and Uncertainty
The mean projected market penetration for PEVs in the study is 21% by 2030 and 46% by 2050. The standard deviation and 90% confidence interval bands are shown in the projected PEV market share graph.
The analysis suggests that there is significant uncertainty in market penetration due to the high level of sensitivity to factors such as vehicle price and fuel costs.
Plug-in Hybrids
One thousand simulations were performed while varying the values of 19 different factors affecting market penetration. The market penetration values—the percentage of market share—were projected for both plug-in hybrids and EVs. As shown in the histogram charts below, the projected market share of plug-in hybrids in 2030 ranges from 0% to 30% with a mean of 10% in 2030. A pronounced "spike" in values near 0% indicates the risk of low market penetration for these vehicles. The projected market share for 2050 has a similar range but a higher mean value of 17%. The spike near 0% still exists in 2050, but it is much smaller than in 2030. The research team investigated the cause of the spike near 0% and found it to be mostly related to scenarios with high plug-in hybrid vehicle price sensitivities and high consumer value of make/model diversity. This suggests that high initial price and limited vehicle selection could be significant obstacles to consumers purchasing plug-in hybrids.
Electric Vehicles
The projected penetration rate for EVs in these simulations is higher. Market share of EVs ranges from 0% to 26% with a mean of 11% in 2030 and ranges from 0% to 55% with a mean of 28% in 2050. Note that the distributions for EVs are more symmetrical than those for plug-in hybrids with no spike in values near 0%. This suggests that there is less risk of low market penetration for EVs.
Factors Affecting Market Penetration
Sensitivity analysis was performed on the factors affecting market penetration. The results for plug-in hybrids and EVs are presented in tornado charts below. The size of the bar indicates the strength of the correlation between that factor and market penetration. Values with a negative sign reduce market penetration as the value for that factor increases, and values with a positive sign increase market penetration as the value increases. For example, as price slope multiplier increases for plug-in hybrids and EVs, market penetration decreases. Conversely, as gasoline and diesel prices increase, market penetration increases.
Determining the sensitivity of the results to various market penetration factors allows planners and stakeholders to both assess risk and prioritize the potential obstacles to consumer acceptance of these vehicles. The results of this study also show that the factors that affect market penetration change over time and that, despite the similarities in the technologies, the factors for plug-in hybrids and EVs differ.
Plug-in Hybrids
Consumer sensitivity to vehicle price is by far the greatest factor affecting plug-in hybrid market share in both 2030 and 2050. It is roughly twice as significant as the next factor for both of those projection years. The value of make/model diversity to consumers is the second most important factor in 2030 but slips to fourth in 2050. The coefficients for these two factors are negative. So, the more important vehicle price and selection are to consumers, the less attractive plug-in hybrids become. Perceived vehicle lifetime is the time a consumer plans to keep or get value out of the vehicle. Therefore, it affects both potential costs (e.g., loss of time re-charging, extra costs related to EV range limitations, etc.) and savings (e.g., fuel and maintenance savings). This is the third-ranking factor in 2030 but increases slightly by 2050 to become the second-most factor. Gasoline and diesel prices are a significant factor in the nearer term but become much less important by 2050. Conversely, the availability of Level 2 charging at home is less significant in the near term but much more important by 2050.
Electric Vehicles
The market penetration of all-electric vehicles is much more sensitive to gasoline and diesel prices than that of plug-in hybrids. It is the most important factor for EVs in 2030 and the second-most important factor in 2050. This is intuitive since EVs benefit much more from the price difference between electricity and gasoline/diesel since they operate on electricity all of the time. Driving range is the second-most significant factor in 2030 and decreases slightly by 2050, ranking third in importance. Similar to plug-in hybrids, the availability of Level 2 charging at home increases in importance over time. For EVs, it is the most important market penetration factor in 2050. Vehicle prices is important for EVs, though much less so than for plug-in hybrids. It is ranks third among factors in 2030, but ranks fifth among factors by 2050, dropping in significance by over half.
Conclusions
Plug-in electric vehicles have the potential to account for roughly half of the light-duty vehicle market by 2050. However, there are significant risks for plug-in hybrids, especially if vehicle costs remain high and vehicle selection remains low. The risk of low market penetration for EVs is lower and more dependent upon gasoline and diesel prices and driving range limitations. Finally, for both plug-in hybrids and EVs, availability of Level 2 home charging is important to successful market penetration, especially in the long term.