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Norway Leads with Electric Cars

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% of February car sales in Norway, with a population of 5mn, compared to fractions of 1% in most nations. In the US, for instance, they made up just 0.1% 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 ($35,500), including a £5,000 government subsidy, the same Golf sounds a bargain at £16,285 ($24,600).

Norway’s centre-left government says small nations can lead the way for others like the US, 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 Holtsmark.

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 be reviewed.
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