The demand for electric vehicles is a given - the course seems clear for growth and is growing at a feverish pace.
The question isn’t how much the market is going to grow in its entirety; but rather, how does your organization fit into this - how much market share are you forecasted to capture, what are these market drivers, and how do they fit with your strategy. How should you pivot, if at all?
To secure positioning in this landscape, your team could be currently trying to gather data on the price of electricity at charging stations, the number of charging stations, or the role of fiscal incentives on electric vehicle (EV) ownership.
Now, you might or might not have a clear picture of your market drivers. That’s one thing. The other more pertinent issue is not having complete data to generate a forecast that you can trust and pivot accordingly. There is currently insufficient public data that captures present-day market information, only annual data is made available. Some of these data points that are key to forecasting the demand driven by electrification are; the number of charging stations and their price of electricity, visitors to showroom, number of pre-ordered cars, and many more related indicators.
There currently might not be an ideal way to retrieve data on the price of electricity at these stations or qualitative sentiments, eg: attitudes towards leasing contracts.
Why’s that so?
The EV landscape is fast-evolving, and data on the key market drivers and this phenomenon is incomplete and subject to quicker-than-usual changes. The dynamic nature of this data compounds the issue. Case-in-point: complete data on the number of charging stations will probably only be available in a year from now, rendering fragmented forecasting.
How can Google Trends factor in your forecasting and mitigate this challenge?
Given these dynamic changes in the EV landscape, another factor to consider is weaving in these search trends quantitatively.
In tandem with other leading indicators, the data that Google Trends provides not only assists in identifying suspected demand signals, but can also help your team capture new social indicators or trends to augment your existing forecast. Just like the other indicator identified as relevant, this data can act as a barometer to help you forecast your market share. If anything, in the absence of updated public data, the data provided by Google Trends can act as a proxy for the EV data you might only have access to in a year.
The data that Google Trends provides not only assists in identifying suspected demand signals, but can also help your team capture new social indicators or trends to
augment your existing forecast.
Again, Google Trends data points should not be analyzed in isolation. The interplay of these different leading indicators ensures you sidestep misleading correlations that could culminate in inaccurate forecasting results.
To put theory to test, we used Indicio to forecast the monthly Battery Electric Vehicles sales in the European Union, and here are the most influential indicators in relation to the main variable (EV-Volumes). (A caveat - Google Trends data points should not be analyzed in isolation. The interplay of these different leading indicators ensures you sidestep misleading correlations that could culminate in inaccurate forecasting results. )
Here are the indicators (Ranked from most influential to least):
- Euro Area, Consumer Surveys, DG ECFIN, Consumer Confidence, Intention to Buy a Car within the Next 12 Months, SA
- Google trends: Elektroauto
- Google trends (Topic): electric price car
- Google trends: charging station
- Google trends: bonus écologique voiture électrique
- Google trends: electric car incentives
- Google trends: price electric car
- Wholesale & Retail Trade & Repair of Motor Vehicles & Motorcycles, Prices Expectations Over the Next 3 Months
- Consumer Price Index: Harmonized Prices: Total All Items for the Euro Area
- Google trends: range electric car
- Google trends: electric vehicle
- Google trends: Tesla
- Google trends: electric vehicle price
- World, Crude Oil, Brent, Spot, FOB North Sea, ICE, Close, USD
- Google trends: electric vehicle 2022
- Lithium Ion Batteries for Motor Vehicles, Index
- Electrical Equipment, Appliances & Components, Battery, Current Prices, SA, USD
- Transport, Car Battery Price, Index
A closer look at how these indicators were identified:
Finding meaningful indicators is like looking for a needle in a haystack. There are a lot of possible variables influencing sales and we need a method to find relevant ones.
Traditionally, companies looked at correlation coefficients between variables to determine what drove sales. However, this methodology is usually subject to spurious correlations and therefore unreliable.
With Indicio, you can test a lot of indicators automatically. It utilizes Lasso regularization’s shrinkage power. Measuring the indicators’ impact as a whole, Lasso isolates the relevant signals and leaves out the noise. It also detected 4 outliers that we added as events in form of sales spikes:
Here are the forecasted expected EV registrations for 2022 and 2023:
Interested to learn more about how you can use this methodology to generate your forecasts?