The International Energy Agency must love the Stanley Cup Playoffs because their recently published Global EV Outlook was full of hockey sticks!
The hockey stick graph, you may recall, was popularized as a key piece of evidence supporting the existence of climate change. Rest assured, there will be no debate of climate change here. I am a deep believer in the appropriate use of sports metaphors to describe complex phenomena. The greenhouse gas emissions hockey stick graph tells about as simple a story as can be told about climate change.
The hockey stick is a pithy way of showing how a creeping linear trend jumps into an exponential growth (or decay) phase. Our minds are wary of things that change exponentially. They are just not normal. That is because from one time period to the next, your worldview, let’s call it your umwelt, is dramatically different. Yet, as history shows, this Law of Accelerating Returns holds to key to understanding technological progress over the course of history.
We see hockey sticks everywhere now. Some, we should get excited about like renewable energy deployment. Others, we might be wary of like the growth of the economy. Some indicate a phase shift, as in the case of the transition to renewable energy. Others might indicate a boom-and-bust cycle, with exponential growth followed by precipitous declines. The trick is understanding the underlying drivers of change.
So, about EVs. Not long ago, EVs were very rare, too expensive, and only the most ostentatious environmentalist among your friends was even considering buying one. Skip ahead five years, and all of sudden, your umwelt has changed. The Law of Accelerating Returns has been hard at work. Now, you are starting to see EVs everywhere you look, EV charging stations are taking up the best parking spots, and your neighbor down the street likes to park their EV in the driveway to show it off while it charges. And this is just the beginning.
What changed? Well, largely it was a story of rapid technological innovation leading to dramatic cost reductions. The most important of these is with the battery, of course. As batteries make up around ⅓ of the cost of an EV, the increases in energy density coupled with the reduction in battery cost have started to bring EV costs down from the stratosphere. And not to dismiss, also helped alleviate the all-important “range anxiety.” We Americans do have a pastime of hitting the open (or congested) road without a worry until the next gas station. If battery technology continues its march of progress, look out for the Law of Accelerating Returns to come into full force in the EV sector.