| OSLO, March 13
OSLO, March 13 Norway's buzzing little market
for pure electric cars has in its very success shown the severe
drawbacks to a model that relies on public subsidies worth as
much as $8,200 per car, every year.
Car makers like Nissan, Mitsubishi,
Peugeot Citroen and Tesla Motors see Norway
and its 10,000 battery-powered vehicles as a reason for optimism
in otherwise gloomy terrain.
Pure electric cars made up 3.0 percent of February car sales
in Norway, with a population of 5 million, compared to fractions
of one percent in most nations. In the United States, for
instance, they made up just 0.1 percent of all car sales in
But the factors that have made the car sell in Norway show
how hard it would be to make the proposition work anywhere else:
the car can't go long distances and isn't economical unless the
government kicks in hefty incentives like tax breaks, free road
tolls and free parking.
Ironically, experts say, electric cars may not even be
helping the environment.
"Norway's an oasis in a huge desert," said Peter Schmidt,
editor of Automotive Industry Data Ltd. in England. "But it's an
example can't be followed - it only works because Norway has a
'supertax' on normal cars."
State subsidies, intended to promote a less polluting form
of travel and cut greenhouse gas emissions, help bring the price
of buying the top-selling electric Nissan Leaf in Norway down to
240,690 crowns ($42,500), competitive with the 1.3-litre
Volkswagen Golf at 238,000 crowns ($42,000).
But in Britain, for example, while the Leaf is cheaper at
23,490 pounds ($35,500), including a 5,000-pound government
subsidy, the same Golf sounds a bargain at 16,285 pounds
LEADING THE WAY
Norway's centre-left government says small nations can lead
the way for others like the United States, which is the world's
largest market for electric cars with 14,687 sold in 2012 but
which has backed away from a goal of putting a million electric
cars on the roads by 2015.
But its example shows the huge cost involved - one that only
a country like Norway, which has escaped the global economic
slowdown thanks to vast revenues from oil and gas, can afford.
Norway's tax breaks on the purchase for electric cars are
worth almost $11,000, or $1,400 a year over a car's lifetime,
according to a study by Statistics Norway analyst Bjart
Commuters driving into Oslo from the surrounding areas save
an annual $1,400 in road tolls, can get free parking worth
$5,000 and avoid other charges of $400.
It all adds up to as much as $8,200 per car, per year,
before taking account of the benefit of driving in the bus lane
rather than sitting in a queue with other cars.
The incentive scheme is due to run until 2017, when it will
"This is a good introductory offer," said Norwegian
Environment Minister Baard Vegar Solhjell.
"It's a way to spread ideas and it also creates a lot of
interest among the car companies," he said.
With three young children, Solhjell can't find an electric
car big enough for his family and drives a 7-seat Ford Galaxy,
Even some Norwegian electric car owners have misgivings
about the state's largesse.
"The benefits are ... too good. You can take bus lanes, get
free parking and it costs very little to refuel," said Ole
Marius Lauritzen, 44, who lives 25 km (15 miles) outside Oslo
and used to commute to his work at a bank by bus.
Like 40 percent of other Norwegian households with electric
cars, Lauritzen's blue Think City car, made by a now-bankrupt
Norwegian firm once owned by Ford, is his family's second car.
"It has to be the second car for the family, because it
still has a limited range," especially in winter when the cold
drains batteries, Lauritzen said as he recharged the vehicle for
free in a snow-decked electric car park in central Oslo.
Oslo has 446 parking places with free recharging and the
municipality plans to add 800 more at a cost of 59 million
crowns ($10.33 million) over the next four years. Drivers can
also recharge at home.
The range issue - many can only go about 100 miles (160 km)
or less without recharging - is a huge problem in countries like
the United States, where long-distance driving is a way of life.
One U.S. study said 70 percent of drivers surveyed wanted
driving ranges of 300 miles (510 km) before they would consider
buying an electric car despite federal tax breaks worth up to
$7,500, in addition to state incentives.
By encouraging people who can afford it to buy a second car
instead of taking buses and trains, the electric car scheme may
ironically be aggravating environmental problems and causing
traffic jams, analyst Holtsmark said.
Tesla Motors says its Model S car, due on sale in June, will
be able to reach such ranges if driven correctly.
"There is a huge opportunity here ... (for Norway) to set an
example for the rest of the world," Tesla Motors' co-founder
Elon Musk said in a speech in Oslo this month.
HURTING, OR HELPING?
Experts say electrification with renewable energy is
essential if rich nations are serious about goals of cutting
greenhouse gas emissions by 80 percent by 2050 - transport now
accounts for about a fifth of all greenhouse gas emissions.
European Union member states, for example, are aiming for at
least 9 million electric vehicles by 2020, against less than
100,000 now. The group also wants 10 percent of transport in the
EU to run on renewable fuels by 2020 - such as biofuels or
'green' electricity, up from 4.7 percent in 2010.
On this issue, Norway again stands head and shoulders above
the rest - almost 100 percent of electricity is generated from
clean hydropower, so a shift from gasoline and diesel cuts
But Norway is not the norm. Elsewhere, electric cars may cut
pollution locally by eliminating exhaust but are often charged
from electricity generated by high-polluting coal-fired power
In fact, in places like China, the requirements for electric
cars just add to environmental problems.
Many Chinese power plants use coal with few filters, spewing
out particulate matter - chemicals, acids and metals - that
causes more pollution per km for electric cars than
gasoline-powered cars, said Chris Cherry, an electric vehicle
analyst at the University of Tennessee.
"In China, electric vehicles may worsen health effects
compared to normal cars," said Cherry, who was lead author of a
study published in February in the journal Environmental Science
The policy also does not stack up in the market established
to put some value on curbing greenhouse gas emissions.
Holtsmark estimates that a Toyota Prius hybrid
emits 0.6 tonne of carbon dioxide a year against zero for a
Leaf. Scaling up the Leaf's subsidies means Norway is paying
$13,600 to avoid a tonne of emissions, a stratospherically
expensive policy since the right to emit a tonne of carbon
dioxide costs about 4 euros on the EU's carbon market.
Norway's enthusiasm notwithstanding, many carmakers
acknowledge the all-electric market has not become as mainstream
as they hoped when they gambled billions of dollars on the
Carmakers are shifting from all-electric towards hybrids
like the Prius, which has a gasoline engine backed up by an
electric motor that traps energy when the brakes are applied.
"Demand for electric cars isn't where we thought it would
be," Francois Bancon, Nissan's upstream development chief, said
at the Geneva car show last week. "We're in a very uncertain
phase, and everyone's a bit lost."
Electric car owners in Norway are already starting to worry
about the long-term future of their investment.
"If the bus lane is closed the economic aspect of the car
will be terrible," said Are Paulsrud, who drives a Mitsubishi
"The car cost 250,000 crowns and if the bus lane is closed
... I won't be able to sell it."
($1 = 5.6653 Norwegian crowns)
($1 = 0.6618 British pounds)
(Additional reporting by David Mardiste in Tallinn, Patrick
Lannin in Stockholm, Laurence Frost in Paris and Christiaan
Hetzner in Frankfurt; Editing by Sonya Hepinstall)