EDINBURGH, January 30, 2014—The Norse were renowned for spreading their ideas on the back of their longboats and settlement. Today, however, they are propagating benign policy benefits. As one of Europe’s leading oil producers and with a history of marauding Vikings, Norway is an unlikely heart of the green revolution in the motor industry.
Norway is practically a world leader when it comes to electric vehicles (EV). Electric car sales now represent some 12 percent of sales (Nov 2013) and by the end of February this year, Norway expects to be the first country where one percent of all cars are electric. Last year alone over 3500 Nissan Leafs were sold.
So what makes electric cars so attractive in this sparsely populated nation?
The answer lies in generous subsidies, which not only cut the cost of buying an electric car, but also provide perks for using one. A generous exemption from the 25 percent VAT on new cars is one incentive, but the cars can also be driven for free through road tolls. Another major attraction is they are allowed to drive on the bus lanes of the country’s busiest cities.
Norway has recently reaffirmed its incentive scheme through to 2018, or when there are 50,000 registered EVs. The Norwegian Electric Vehicles Association believes that the government can strive for a target of 100,000 electric vehicles by 2020 – in a country of some five million residents.
There certainly seems to be much that the world can learn from Norway’s experience, but it is far from the only nation looking at policy options to promote EV take-up.
The Netherlands, with a population of some 16.7 million, is not far behind Norway in the world ranks for promotion of EV technology. As a compact, largely urban country, it is almost custom-made for electric car use, which currently only have a range of about 100 miles before requiring recharging. The Dutch are rolling out an ambitious programme of plug-in stations, with the aim of ensuring there is an EV rapid recharging station free for use every 50kms.
Like the Norwegians, the Dutch have adopted a range of measures to attract electric motorists including exemption from registration fees and taxes. Moreover, there is free parking available for EVs in congested Amsterdam. The Dutch have taken to their new electric cars and there seems to be no turning back.
Many other nations are similarly following the path of Norway and the Netherlands, though not with the same vigour. The UK and France both offer generous tax concessions to new buyers of EVs and their motor manufacturing plants are churning out Nissan Leafs and the Renault Zoe, among other brands. However, electric car sales only represent about one percent of the current market, and many have criticised the UK Government for wasting taxpayers’ money on such a small share of the car market.
Beyond Europe there are great opportunities for electric cars and it is in many of the emerging markets where we are likely to see some of the biggest increases over the coming decade. The USA has a well-developed electric car market. The Tesla Model S has been selling well and Tesla Motors hopes to sell some 40,000 vehicles in 2014. Tesla has invested in a US network of supercharge stations. California currently leads the US network with well over 1,000 electric charging points across the state. The USA is set to become the largest EV market by number in the medium term, though Europe will likely have high rates of penetration.
The biggest focus and impact for the EV market is likely to be in emerging markets like India and China. The Chinese Government has announced subsidies for those buying domestically produced electric vehicles and wants to see five million new “energy vehicles” on the road by 2020. Most of the EV production in China has been on buses to date, but that looks set to change with these new government measures. India too has a growing EV market and set out in its National Electric Mobility Mission Plan an ambitious target of some seven million EVs and hybrid vehicles. Leading motor manufacturers in the nation, such as Tata and Mahindra, are already looking at new electric cars.
There are of course question marks over electric vehicles and their benefits. Running on electricity only makes them a greener form of transport if the electricity production is green in the first place. Norway certainly meets that criteria with its abundance of renewable energy, but other countries may be far less green. Secondly, EVs do not reduce traffic congestion, and in many cases, electric cars are still the preserve of the middle classes, where they own two or more cars. However, it does appear that EVs are becoming the primary car in many households, rather than their secondary car. Part of the reason for that are the advancements being made by the motor industry to make their electric cars every bit as slick and comfortable as their petrol counterparts.
The future of electric vehicles looks increasingly bright as more companies and nations start to take electric vehicles seriously. Norway has already shown the world that the electric vehicle need not only be for small nations with dense populations. The Netherlands has demonstrated the impact that a good network can bring. Many US states are taking electric cars seriously.
Hopefully these lessons and many others will be quickly learned by other governments across the globe, though it will take continuous technology improvements to bring the longer term costs of EVs down. Nevertheless, the price of electric cars is already falling and is increasingly becoming an option for those from poorer households and emerging nations.
2014 may well be the year that the time of EVs has come, but governments need to ensure that the increased consumption of electricity is met with green, sustainable forms of energy; otherwise, there is the risk of replacing one problem with another.