Norway shows the way with electric cars, but at what cost?

Wed Mar 13, 2013 11:33am EDT
 
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By Alister Doyle and Nerijus Adomaitis

OSLO (Reuters) - 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 2012.

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 ($24,600).   Continued...

 
A driver leaves a free car park reserved for electric vehicles in Oslo February 25, 2013. 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. Picture taken February 25, 2013. REUTERS/Alister Doyle