4.4.5.2 Detecting early opportunity signals indicators in the electric vehicle transition

The transition to EVs has been widely discussed as approaching a tipping point in some countries, and having passed one in others (Meldrum et al,. 2023, see 4.3.2.2). By analysing sales data of EVs (including battery electric vehicles (BEVs) and hybrid electric vehicles (HEVs)), and internal-combustion engine vehicles (ICEVs), we can attempt to detect this transition by measuring the resilience of markets for both the incumbent and the new technology. The EV transition involves strong feedbacks between technological development that makes EVs more affordable, accessible and attractive, and changes in the social domain, including public interest in and perception of EVs (Figure 4.4.8). To understand this social dimension of the transition, we also consider the frequency with which people view EVs in the UK on AutoTrader, an online marketplace site (Boulton et al., 2023). 

Can we measure the resilience of the automotive industry?

If we consider the automotive industry as a complex system, consisting of an interconnected ecosystem of, among other things, production, sales and public preference and needs, then the question arises of whether we can measure the resilience of this system in a comparable way to a ‘natural’ ecosystem, such as a rainforest.

While numerous factors might affect the stability of this system, such as supply chain resilience, one simple metric is to consider the sales of vehicles. This can be affected by economic shocks, and recovery from shocks could provide an indication of the resilience of this system.

One such event is the 2008 financial crisis which, among other impacts, caused a rapid decline in vehicle sales across many major markets (Figure 4.4.9). For Denmark and the US, this perturbation caused an initial sharp decline in sales, which then recovered over subsequent years. The faster recovery rate of sales in Denmark suggests a more resilient market (and wider economy) than that of the US. Car sales in Greece also suffered because of the wider economic crisis caused by the 2008 financial crisis, and here there is no observable return, with the system tipping into an apparently alternate stable state of very low car sales; thus suggesting very little resilience prior to 2008. The effect of government intervention to support the automotive industry as a significant employer can be seen in Germany (Haugh et al., 2010), where incentives provided a boost to sales in 2009. A similar scheme in the US resulted in a brief spike in sales that same year, however true recovery took longer, again suggesting lower resilience.

While this approach does not delve deeply into the underlying structure of the automotive industry and the fact that the 2008 financial crisis occurred as a different perturbation in different economies, it illustrates an approach to applying concepts of resilience from the natural sciences to broader socio-economic questions.