Parallels
12:24 pm
Tue March 11, 2014

Norway Takes The Lead In Electric Cars (With Generous Subsidies)

Originally published on Tue March 11, 2014 4:51 pm

When Jonette Øyen bought her first electric car, it turned heads. "Now nobody turns around!" she says with a laugh.

Sometime in April, Norway is expected to become the first country where one in every 100 cars is purely electric. One percent may not sound like a huge figure, but in the U.S., the equivalent number would be something close to .07 percent.

Driving around Oslo, it's a number that becomes quickly visible as Øyen interrupts herself every minute or two to point out another EV passing quietly by. Popular electric vehicles in Norway include the Think and Buddy, which are both produced by Norwegian car makers, as well as Nissan's Leaf and Tesla models.

This is all started years ago, when Norway had a fledgling electric car industry of its own. In an effort to boost sales and reduce emissions, the Norwegian Parliament put forth a very generous package of incentives to get its people off fossil fuel. The big one: no taxes. In a country where taxes can double or even triple a car's purchase price, that's huge.

Still, as Transport Minister Ketil Solvik-Olsen explains it, those were the days when electric meant "tiny, kind of plastic cars seating two people, where you would freeze to death during the wintertime." He says that while the pitch appealed to early adopters and environmentally conscious people, sales were not about to rise dramatically in snowy, mountainous Norway.

Parliament decided the tax break would end when the country's EV total reached 50,000, or in 2017, whichever came first.

By 2013, Norway's electric car industry had pretty much fizzled, but California-based Tesla was cranking them out, kickstarting other major automakers into action. With EVs on the market that some consumers actually wanted, suddenly those tax incentives became a lot more alluring.

In September of last year, Norway becomes the first country ever to have an all-electric vehicle top the monthly best-seller list: the Tesla Model S. In October, it was a different all-electric model: the Nissan Leaf.

But Wait, There's More!

The perks of EV ownership in Norway go on and on: no tolls, free use of the bus lanes, free parking, free ferry rides and free charging at municipal stations. Norwegians with gas-powered cars pay about $9 a gallon to keep them moving.

Put it all together, and in just one year, Norway's EV population doubled to its current total of almost 25,000. At this rate, that once-ambitious target of 50,000 could be met by the summer of 2015.

EV proponents are ecstatic. Electric cars, they say, are quieter and good for the environment. That's especially true in Norway where 99 percent of generated electricity comes from clean hydropower.

But there is a "snake in paradise," as users in an electric car chat room described one critic. In his neat little office at Statistics Norway, Bjart Holtsmark doesn't appear particularly serpentine. This is a man who bikes to work and mostly studies the economics of carbon trading. But as one of the few vocal critics of Norway's EV policy, he isn't the most beloved person among electric car components.

Holtsmark has crunched the numbers and figures that Norway is currently subsidizing each Nissan Leaf — about half the EV population — to the tune of $8,000 per year.

In the U.S., by comparison, EV owners are eligible for a one-time federal tax credit of up to $7,500 and a variety of other incentives that vary by state.

Using that $8,000 figure, Holtsmark goes on to calculate that, in terms of its EV policies, Norway is paying $13,500 per ton of CO2 reduction. A ton of CO2 on the European permit market costs $5.

"If we should have such high subsidies for electric cars in Norway, it must be the goal that electric cars could be a solution for the rest of the world also. You can't have these subsidies only to introduce electric cars in Norway," Holtsmark says.

Unfortunately, he says, the rest of the world is far from ready. Norway has a lot of renewable energy, but fossil fuel accounts for the bulk of the world's electricity production, he says.

"If you introduce electric cars on a large scale today, it would actually probably increase the greenhouse gas emissions in the world, not reduce them, because the high share of fossil fuels in the electricity market," he says.

At this point, the debate explodes into a many-headed monster of the dueling-science variety.

But regardless of whether the Norwegian example could or should become a model for the rest of world, it has proven a couple of things.

Physically, electric cars may be scrappier than once thought.

"Norway is a hopeless country," says Snorre Sletvold with the Norwegian Electric Car Association. "We have the cold climate, we have a lot of long distances, we have the topography." And yet, he says, here it is, the "kingdom of EV."

The other lesson? Where there's a will — and a sizeable incentive — there's a watt.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, HOST:

And I'm Melissa Block. 2014 is shaping up to be a big year for electric cars. Automakers are releasing a slew of new models. One analyst predicts global production will more than double. Here in the U.S., electric cars are still a really tiny portion of the market. The country in the lead is Norway. Within a few months, one out of every 100 cars on the road there will be electric. Sidsel Overgaard explains why.

SIDSEL OVERGAARD, BYLINE: It all started years ago with people like Jonette Oyen.

JONETTE OYEN: Oh, this is my blue car, electric car waiting for me.

OVERGAARD: Oyen, who is just getting off work at the national archives, has agreed to take me for a spin in her Nissan Leaf.

OYEN: It's been sitting here all day in the snow, but it has been charging so it's going to be full.

OVERGAARD: With that, she unplugs, starts up the car and we're off.

This is actually Oyen's second electric car. She bought her first one almost 10 years ago, hoping to help drive what she calls a conservative car industry away from fossil fuel.

OYEN: I really think the future is electric cars and I think it's the right thing to push that and to push the technology and the development and the - of course, we are lucky in Norway because we have a lot of water electricity.

OVERGAARD: That is hydropower, which accounts for 99 percent of Norway's power production. Oyen admits it's also been fun to have a car that turns heads, although that doesn't happen so much anymore. As we drive, it's soon clear why.

OYEN: That's a small electric car. That one's the Buddy and one of the earlier small ones. There's the Think, the black one there. That's a Tesla right there. That's a Leaf coming there.

OVERGAARD: Just four of the nearly 25,000 electric cars now populating Norway's roads. Oyen's motive maybe mostly environmental, but there are lots of benefits to owning an electric car in Norway, especially if you're stuck in traffic.

OYEN: I can decide that I don't want to be in this queue and I can just go here instead.

OVERGAARD: Here is the bus lane and that's just the tip of the iceberg.

SNORRE SLETVOLD: You can drive in the bus lane. You can park for free, charge for free.

OVERGAARD: Snorre Sletvold heads Norway's Electric Car Association.

SLETVOLD: You can also take the car with you at the ferry for free. You can pass the toll for free and when you buy the car, you don't pay any tax.

OVERGAARD: That last point is huge since the Norwegian tax on cars is one of the world's highest. Taking the whole package into account, one economist has figured that Norway subsidizes each Nissan Leaf to the tune of $8,000 per year. Luxury cars like the Tesla Model S cost the government even more and that, says Sletvold, is what has launched most EV owners into the market. That and good old word of mouth.

SLETVOLD: That's true. I buy the car and my neighbor has buy the car and some of our board member in the street he live, I think the half of the household now has an EV.

KETIL SOLVIK-OLSEN: Every other car have an electric car, you do have a trouble for the utility company in the afternoon when everybody get home from work and plug it in.

OVERGAARD: That's Norway's Transport Minister Ketil Solvik-Olsen. He says already there are parts of Oslo where power lines need to be upgraded, thanks to the popularity of EVs and transit companies are starting to complain about the number of electric cars clogging up the bus lanes. Solvik-Olsen says years ago, Norway's parliament decided the current tax incentives would expire once there were 50,000 electric cars on the road. At the time, that seemed incredible ambitious.

SOLVIK-OLSEN: When the only cars, electric cars, you could buy were tiny, kind of plastic cars seating two people, where you would freeze to death during wintertime. Not a lot of people would buy them.

OVERGAARD: Now that that's no longer the case, he says, it might be time to reevaluate.

SOLVIK-OLSEN: When the world changes, you should also update your policies and that's what I think we have to do.

OVERGAARD: No one, including Solvik-Olsen, seems to think the incentives will go away entirely. But a decision about what happens next is right around the corner. At the rate things are going, that 50,000 target could be hit by next year. For NPR News, I'm Sidsel Overgaard. Transcript provided by NPR, Copyright NPR.