Modeling market development of electric vehicles

Automobile powertrains are so far predominantly based on internal combustion engines burning fossil fuels so far. However, due to mandatory emission reduction and rising oil prices hybrid and full electric vehicles are about to be introduced in mass markets. Given their high costs, small range and missing recharging infrastructure, electric vehicles do not seem to be competitive enough compared to conventional powertrains to gain significant market share. This paper examines how such an infrastructure-dependent innovation can succeed on the long term in competition with an incumbent technology. A dynamic model is presented that contains cost, range, and infrastructure development as dynamic effects which drive adoption. The model is analyzed further in a simulation study, where the strength of feedback effects is evaluated. From this study it has to be concluded that it is primarily a quickly growing customer awareness that enables long-term market growth for electric vehicles. Quick cost reduction for batteries also has a significant effect, but it is less significant than awareness.