Denmark Leads Europe's Electric-Car Race

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Miguel Villagran / Getty

Charging a SMART electric car in Frankfurt, Germany

An electric-car race is under way in Europe and countries are rushing out their plans for the future — each one more ambitious than the last — in an effort to prove who's the greenest of them all. Spain aims to have 1 million electric or hybrid cars on the road by 2014 (though it hasn't specified how many of each). Britain is trying to persuade Japanese automaker Nissan to make its Sunderland plant the European base for its little electric car the Leaf, and London plans to have 25,000 charging stations hooked up to the grid by 2015. France has put big money into building a countrywide network of charging stations, as well as a plant to produce electric-car batteries. Not to be left out, Portugal is gearing up to be one of the first markets for Renault-Nissan's electric cars in 2011.

Are all these plans feasible? Most of Europe's projects have hardly left the racing pits. Vehicle production by a major automaker won't start for at least a year or so. Renault looks set to be the first off the line, with plans to roll out four mass-market models in 2011 and 2012. And then there's the problem of the lack of a universal charging standard — European countries have yet to agree on a single plug and socket for electric cars, a process that could take years. And some analysts still question whether there will be enough demand for the vehicles — and if governments will pony up the necessary financial incentives to make them attractive to buyers.

One country, however, appears to be better prepared than the others: Denmark. The biggest Danish power company has partnered with a California start-up company, Better Place, to build a nationwide grid to support electric cars, composed of thousands of charging poles in towns and cities and service stations along highways where depleted batteries can be swapped for fresh ones on long trips. (They're called "switching stations.") This isn't pie-in-the-sky stuff, either — Better Place announced last week that it had raised $350 million to support the venture, one of the largest rounds of venture capital for a clean-tech company ever. (The company is also planning to build charging networks in Israel and Portugal, but its Danish project is a bit further along.)

Just as importantly, the Danish government is firmly behind the project. Late last year, it promised not to impose the normal vehicle-registration tax of 180% on electric cars until 2012 — a tax break of at least $40,000 for early buyers — and to provide drivers with free parking in downtown Copenhagen. Not only that, but the company has signed a deal with Renault to supply 100,000 cars — the company's new Fluence ZE model — to Denmark and Israel by 2016.

Jens Moberg, the head of Better Place Denmark, says the company is aiming to have the first cars on the road in Denmark by the second half of 2011. Within one year, he expects the number of vehicles to be "in the thousands," and by 2020, he believes there will be more electric cars sold in Denmark than combustion-engine cars. "We've managed our business in a responsible way and the Danish government has said we want to support this," he tells TIME. But he knows there's also an inherent risk in being first, particularly when it involves building an expensive infrastructure before any cars have been sold. "We think it's important to be ahead of the curve, but you don't want to put out charging spots in the thousands without any cars on the roads," he says.

Indeed, the chances of failure are high. Already, Better Place has run into problems with Renault over Denmark's promised tax exemptions. Last year, the former Climate and Energy Minister, Connie Hedegaard, suggested the government might extend the tax break until 2015, but months later, a decision on that has yet to be made. "If we don't get a clarification, then we at Renault want to focus on other countries for the first electric cars," head of Renault Denmark, Henrik Bang, told the Berlingske Tidende newspaper last month. Renault has since reaffirmed its commitment to the project, and Denmark's new Climate and Energy Minister has promised to resolve the issue quickly.

Still, the charging network is incredibly expensive to build. Better Place's system hinges on the switching stations, which make electric cars viable for long-distance trips and thus, more attractive to potential buyers. Here's how it works: after consumers buy their cars, the company provides them with batteries and charges them a fee to use them, based on the miles they drive. When the batteries run out of juice on long trips, drivers can replace them at switching stations in the amount of time it takes to fill a tank of gas. Better Place says the stations — which will reportedly cost about $500,000 apiece to build — will eventually stock several different batteries to accommodate all the various car models on the road.

And then there's the lack of a standardized European plug and socket. Germany, with Renault's support, is pushing its seven-point version to be the standard, but other countries have their own ideas of what the connectors should look like. "Because Europe is fragmented and countries are putting forth their cars, it's going to be more difficult to come to a federal conclusion," says Calum MacRae, an automotive expert with PricewaterhouseCoopers in London. "Obviously, if you standardize [the connectors], you bring the cost down." And when it comes to selling the public on electric cars, price will be crucial.