Hitting the Moving Target of Future EV Sales

“The one thing for sure about forecasts is that they are always wrong.” This common axiom came up during a recent conference. We in the forecasting business know the challenges that come with predicting sales of any products given the many direct and indirect forces at play. I recently decided to hold up a mirror to Guidehouse Insights’ historical vehicle forecasting performance, and upon reflection, we’re looking pretty good.

How Close Are These Forecasts?

The chart below shows how close Guidehouse Insights came in prior forecasts to predicting the actual PEV sales in the US in 2018. Based on changing market conditions, the forecasts have been revised up and down. The first forecast I compared was from 2016, and I was pleasantly surprised. Guidehouse Insights had underestimated the 2018 PEV sales in the US by just 0.2%. Overall, Guidehouse Insights has been fairly on target, even going back to 2012, when very few of today’s PEVs were publicly known.

PEV Sales Forecasts Versus Actual Sales, US Markets: 2011-2022

(Source: Guidehouse Insights)

History of Guidehouse Insights Vehicle Forecasts

For the last decade, Guidehouse Insights has been forecasting global vehicle sales, including segmenting sales by drivetrain such as plug-in EVs (PEVs), hybrids, natural gas, fuel cells, and conventional internal combustion engine vehicles. Guidehouse Research is constantly revising forecasting methodology based on the input received from automotive, fuel supplier, government, and other industry clients. The Guidehouse Insights vehicle forecast model was started in Excel, but the demands of greatly expanding the number of variable inputs as well as calculating different scenarios convinced us to move to a new model (VAST, or Vehicle Adoption Simulation Tool) that performs the data analysis using scripting languages, which provides greater flexibility and eliminates those pesky formula errors.

How Are These Forecasts Estimated?

Some of the primary inputs that influence Guidehouse Insights forecasts include the size of the overall light duty vehicle market (currently trending down in the US), federal policies and incentives, the price of crude oil, lithium ion battery prices, and the number of PEV models expected to be available, among many others.

Increased model availability, in both absolute numbers and segments addressed, is critical to expanding sales of PEVs. Automakers will offer more options in the growing SUV, crossover, and light truck categories beginning in 2021, which are essential for PEV sales to move beyond a niche. While General Motors recently stopped producing the Chevrolet Volt extended range PEV, the company is expanding its battery electric offerings, including a new vehicle based on the Bolt platform and manufactured in the US. BMW says it will have 12 battery electric models by 2025, including the i4 and iNext crossover with 373 miles of range.

A Strong Future for PEVs

Automakers are making their PEV platforms flexible to fit multiple body styles (such as VW’s MEB platform), and they are designing the vehicles as global offerings to reduce their costs through larger volume production. Chinese heavyweight BYD could sell more PEVs than internal combustion engines domestically in 2019, a seismic shift for the country’s largest vehicle seller that will likely export these vehicles internationally.

Despite a contracting automotive market, PEV sales in the US continue to climb. PEV sales were higher year-over-year in January and again in February 2019, when they rose by 2.3%. The total light duty market shrank by 2.9% in February according to AutoNews.com, and auto execs expect the sales slump to continue throughout the year. Guidehouse Insights’ most recent forecast is for the US to pass 1 million in annual sales in 2024. Will reality bear this out? Stay tuned.