THE NORTH RUNS ON ELECTRICITY

E-Mobility—Norway as the world’s trailblazer

In Germany electro-mobility is still waiting for the breakthrough—and this despite the fact that the government has been directly subsidizing the purchase of electric cars ever since last year. Other countries—especially Norway—have made far more headway here. Heartbeat looks into the reasons.

Following a long debate, electro-mobility in Germany has enjoyed direct financial backing from the government ever since mid 2016. Hopes were high, yet the results (at least for now) have been disillusioning: by the end of 2016, the Federal Office for Economics and Export Control (BAFA) had received just 9,000 applications for subsidies for the purchase of an electric car.

In 2016 the share of e-vehicles in the total number of new registrations came to 0.7%

This means that the number of e-vehicle registrations in Germany hasn’t budged: in 2016 their share in the total number of new registrations came to 0.7%—exactly the same figure as the year before. And this despite the fact that purchasers of fully electric vehicles (EVs) receive subsidies totaling €4,000, while those buying plug-in hybrid vehicles (PHEVs) receive €3,000, with the government and manufacturers each covering 50% of the respective amounts. The main prerequisites: the standard version of the car is not allowed to cost more than €60,000 and must be a newly registered vehicle.

The world’s e-mobility trailblazer

The situation in Norway could hardly be more different. The Scandinavian nation is on the cutting edge of sustainable individual mobility. In the meantime, more than a quarter of all newly registered automobiles are either electrically powered or plug-in hybrids; taken together, they represent a market share for 2016 of 29.1%—a phenomenally high figure given the recentness of this trend: in 2011 the share of newly registered electric vehicles was just 1.3%. In 2017 the share of EVs and PHEVs in Norway’s total pool of automobiles will break the 5% barrier for the first time. By way of comparison, the figure for Germany is less than 0.1%. What explains the drastic difference between the two countries? It can no longer be argued that the discrepancy is due to a lack of different models to choose from, whether in Germany or Norway. In Germany alone, the BAFA list contains 100 different vehicles eligible for the subsidy. The days when customers simply couldn’t find a suitable EV or PHEV are over. This is borne out in a current study of e-mobility conducted by McKinsey: just 13% of those surveyed in the USA and Germany stated that they weren’t interested in electric cars because their preferred model wasn’t available in an electric version.

 

Range anxiety is diminishing

The frequently cited phenomenon of range anxiety is often stated as a reason for not purchasing a purely electrically powered automobile. And it’s true that despite advances in performance, an electric car still can’t match the range attained by a gasoline- or diesel-powered vehicle. Yet there are now solutions. Range extenders such as Rheinmetall Automotive’s REx—ease the fear of being stranded with an empty battery. Also another Rheinmetall Automotive component, the heat pump, can enhance the operating range of electrical vehicles. When it comes to PHEVs, range anxiety barely exists and their shorter operating range doesn’t explain why electric cars in densely populated Germany—with its numerous metropolitan areas and resulting short travel distances—are less popular than in Norway, a country with barely 13 people per square kilometer. Closely related to range is the question of infrastructure, which essentially comes down to the availability of charging poles. In 2016 in particular, a lot happened in Germany in this respect: by the end of the year, www.chargemap.com, probably the most important website for finding a place to charge a vehicle, listed 6,200 stations nationwide—around 2,000 more than the year before.

Range anxiety and a lack of charging possibilities are no longer the chief reasons for deciding against an electric car

These are distributed over a land surface measuring 357,000 square kilometers, albeit with major regional differences. In Berlin alone, there are more than 600 possibilities for ’filling up’ electrically. In purely statistical terms, therefore, Germany actually enjoys an advantage over Norway with regard to charging infrastructure. According to chargemap.com figures, the Scandinavian country has 2,100 charging poles spread out over 385,000 square kilometers. The McKinsey study also indicates that range anxiety and a lack of charging possibilities are no longer the chief reasons for deciding against an electric car. Less than a quarter of those surveyed in the USA and Germany cited range anxiety as their primary concern, while only 18% mentioned the lack of charging stations.   

Electrically powered cars have to be worth it

According to the McKinsey study, the most important argument against electric vehicles is the hefty purchase price—25% of respondents gave this as their answer. If one looks at the financial incentives for buying an EV or PHEV in Norway, a major reason for the success of e-mobility there quickly becomes clear: the Norwegian government subsidizes every purchase with the equivalent of some €15,000. In addition to this come tax advantages and special privileges such as being allowed to use the bus lane or park for free. Moreover, not only is it cheaper to purchase an EV or PHEV than in Germany, it also costs less to run one—and this despite Norway’s substantially higher wages and salaries.

Electricity in high-cost Norway is roughly a third cheaper than in Germany

This is because electricity in high-cost Norway (depending on the exchange rate) is roughly a third cheaper than in Germany, averaging around ten cents per kilowatt-hour; or up to 15 cents based on the consumption stage. It is therefore clear that electric cars in Norway represent an attractive alternative to fossil fuel-powered vehicles not merely from the environmental standpoint, but also for financial reasons. Outside of Norway too, the e-car has proven successful when it pays to purchase one—but only then. Take the Netherlands, for example: here the share of EVs and PHEVs among all newly registered vehicles was close to 10% in 2015. The reasons for this were similar to those in Norway: first and foremost, major tax advantages made purchasing an electric vehicle worthwhile. At the start of 2016, the tax rules changed in a way disadvantageous to e-car buyers. As a result, sales of EVs and PHEVs plummeted by 64% during the first half of the year. In short, for electro-mobility to make major inroads in the mass market, it has to be financially attractive—environmental considerations notwithstanding.