Norway warms to electric cars

Nov 18, 2013 by Pierre-Henry Deshayes
Christian Blakseth, who traded his bicycle for an electric car, charges his vehicle's batteries, in Oslo, on April 18, 2011

Following the example of their crown prince, thousands of Norwegians have switched to electric cars, taking advantage of strong and somewhat controversial government incentives.

For the second month in a row, an electric car topped new car registrations in October in the Nordic country, where 716 Nissan Leaf were sold with an unprecedented market share of 5.6 percent.

"Norway is showing the way out of oil dependence, or even addiction," said Snorre Sletvold, president of the Norwegian Electric Car Association.

But others say tax exemptions offered to buyers—which for one model exceeds the price of the car itself—is costing the state dearly.

From the modest Buddy, a locally produced two-seater urban car, to the more ostentatious US-made Tesla S, some 15,000 should be rolling on Norwegian roads by the end of 2013, 10 times more than in neighbouring Denmark and Sweden.

Electric cars still represent a small fraction of Norway's car pool, but figures grow steadily every month.

In total, they accounted for 7.2 percent of Norwegian auto sales in October, up from a 3.4 percent market share a year ago.

Around 5,200 have been sold in the first 10 months of 2013 and new models by Volkswagen (including an electric version of its famous Golf), BMW and Renault are expected to hit the market in the coming months.

An electric car charging in Oslo, on April 18, 2011

In September, US-made Tesla S, Crown Prince Haakon's personal choice, topped the sales list due to a backlog that had built up before the first cars were shipped to the country.

Somewhat paradoxical in oil-rich Norway, this success can be partially explained by the numerous incentives intended to foster clean vehicle sales in the country.

Regardless of their price range, electric cars are exempt from VAT and other high Norwegian taxes, public parking fees and urban toll payments, and are allowed to use bus lanes.

A lasting success of these cars will "depend on the authorities' decision to keep these incentives in the long run", Norwegian Road Federation executive Paal Bruhn said.

At the moment, an agreement among several political parties guarantees the incentives at least until the end of 2017 or till Norway's electric car pool reaches 50,000 units.

'Electric car invasion'

The policy has pitted environmentalism against Norwegians' egalitarian streak: luxurious models like the Tesla S, which costs around 75,000 euros ($101,000), also benefit from exemptions.

According to calculations by the specialised website www.bilnorge.no, tax exemptions for the flamboyant US vehicle could reach 91,000 euros, more than the price of the car itself.

"Thanks to politicians who didn't know what they were doing and Norway's car industry, which has blindly followed its suppliers... we are now assisting an electric car invasion that doesn't have a very social character," two car sector experts said on www.bilnorge.no.

"Tax exemptions were indispensable even for a car like the Tesla," Sletvold replied.

"This model debunks misconceptions of electric cars being ugly, unsafe and with a restricted autonomy."

Bjart Holtsmark, researcher at Statistics Norway, also criticises the incentive policy, highlighting the financial losses for the state, the fossil origin of most electricity produced in the world and the households' tendency to buy a second instead of using public transportation.

"Electric cars shouldn't be subsidised at all," he told Norwegian tabloid Verdens Gang last month.

"It would be smarter to use that money on research to develop better batteries."

Explore further: Tesla S electric car tops registrations in Norway

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antialias_physorg
5 / 5 (4) Nov 18, 2013
While i agree that the way this is set up is not very social I can't quite understand this part:
"It would be smarter to use that money on research to develop better batteries."

More EVs on the road mean more demand for follow-up vehicles once people get used to the advantages. This should kick the R&D facilities of automakers into high gear for getting better batteries out there - as that is the make or break issue when going to market.

And auto makers have a LOT more cash than the government for such research.
teribithia
1 / 5 (5) Nov 18, 2013
The difficult is that there is not enough the electric cars charging port , It should be created by gov.
antialias_physorg
5 / 5 (1) Nov 18, 2013
Tesla has already set up 6 charging stations in Norway (I do seem to remember that they wanted to put up a dozen, but I can't find the source).
In total Norway already has more than 1200 charging points. With EVs able to charge off of home plugs that's already a pretty serviceable coverage (not optimal by any means, but at least they're attacking the problem).
italba
5 / 5 (1) Nov 18, 2013
I didn't remember to ever have read such a uninformative and factious article like this one. For instance:
...the fossil origin of most electricity produced in the world...
In Norway almost ALL the electric energy comes from hydroelectric plants! And Norway should not try to improve the use of a low cost and home made resource to keep the oil companies profits? Everybody knows that a new industrial product like the electric cars must be "kick started" in order to get mass production and low prices. So the tax incentives for electric cars are perfectly justified and logical, counting the costs for pollution they can save.
Eikka
1 / 5 (9) Nov 18, 2013
More EVs on the road mean more demand for follow-up vehicles once people get used to the advantages. This should kick the R&D facilities of automakers into high gear for getting better batteries out there - as that is the make or break issue when going to market.


In practice it doesn't.

EV manufacturers source their batteries from the cheapest bidder, which means lower profits, which means less R&D effort.

How the market works tends towards cheaper manufacturing instead of better products, because of copycats who very soon steal the research effort and start producing the same thing except without the cost of original research. Having your own battery R&D is extremely risky. That's why business tends to wait for the public institutions and universities and small startups to come up with the technology first, then buy it off the market.

So, buying more electric cars now generally just gives you more of the same in the future.
Eikka
1 / 5 (8) Nov 18, 2013
In Norway almost ALL the electric energy comes from hydroelectric plants!


Norway is not isolated from the rest of the world. They supply much of the electricty that Denmark needs when their windmills aren't producing, so the more electricity they use for themselves, the less they have to sell to everyone else and the Danes will purchase energy made by German and Polish coal power instead.

The Germans on the other hand are slowly starting to talk about Norway and their potential for pumped hydroelectric storage as something they would like to use as a buffer for their renewables.
Eikka
1 / 5 (9) Nov 18, 2013
Subsidies in general tend to slow things down rather than speed them up, because every opportunist barges in the market to grab the free cash by any means possible. That usually means selling old tech at high prices and pocketing the money, because the old technology is already there.

So while the subsidies last, people are less interested in making something that has actual market value, and more interested in selling stuff that couldn't be sold without the subsidies because it wasn't good enough for the price.

But you can't cut off the subsidies either because that would cause a price hike, which would cause a drop in demand and oversupply in the market, which would put all the companies that did invest in research into bankcruptcy, because they are in a weaker economical position against the companies that simply pocketed all the money. The fact that the subsidies will be cut off at some point discourages innovation.

So the lesson learned is that you don't mess with the markets.
italba
5 / 5 (1) Nov 18, 2013
@Eikka:
Norway is not isolated from the rest of the world. They supply much of the electricty that Denmark needs when their windmills aren't producing, so the more electricity they use for themselves, the less they have to sell to ever
So they'll better burn oil in their cars instead of building more hydro, wind or tidial power plants? When the Denmark's windmills will produce more power than it's needed, they can send it back to Norway!
Subsidies in general tend to slow things down rather than speed them up, because every opportunist barges in the market to grab the free cash by any means possible. That usually means selling old tech at high prices and pocketing the money...
In Germany solar energy incentives have slow down the solar plants? I don't think so. These are not free cash incentives, are tax incentives. You have to pay before you get tax benefits. Why should you get old tech and high prices cars?
antialias_physorg
5 / 5 (1) Nov 18, 2013
...the fossil origin of most electricity produced in the world...
In Norway almost ALL the electric energy comes from hydroelectric plants!

'World'. 'Norway'. Note the difference in spelling.

so the more electricity they use for themselves, the less they have to sell to everyone else

Incentive for Norway and Denmark to build additional (reneweable) powerplants. What's the problem with that?

Tax incentives for low emission vehicles aren't new. There were tax incentives for adding catalytic converters, tax incentives for low consuption vehicles and now tax incentives for EVs. Why not? Tax incentives are practically the only way you can put political ideas into practice (short of ordering people to do X)
italba
not rated yet Nov 18, 2013
@Walters1:
The electromobiles http://www.nytime...ted=all, which is typical for Norway... the conditioning of car powered by batteries has a significant impact to mileage...
Why should you use air conditioning in cold climate?
... In addition, the electromobiles are still significantly more expensive...
Electric cars are more expensive NOW, when the numbers of electric cars produced will reach the number of petrol cars they will costs the same or less. In electric cars there are less parts then in petrol ones.
The Tesla cars are transported by air to their customers.
There is a particular reason for that? Maybe electric cars suffers sea or train trips?
DarkHorse66
2.3 / 5 (3) Nov 18, 2013
@Italba:
Why should you use air conditioning in cold climate?

...to keep warm, perhaps? Air conditioning also has a heater function. And unless you wish to be sitting in your car at temperatures below freezing (since Norway gets VERY cold in winter) and emulate an icicle....
Cheers, DH66
italba
not rated yet Nov 18, 2013
@DarkHorse66: No air condition system used in cars gives out heat. There is always a radiator connected to the motor for that in the air conditioning box. In electric cars you can use spare heat from electronic controller or electric motor. In the coldest climate you'll only need 2 or 3 Kw to heat up a car's cockpit, and electric motors are not 100% efficient.

@antialias_physorg:
'World'. 'Norway'. Note the difference in spelling.
In the article's title I read Norway.

VendicarE
3 / 5 (2) Nov 18, 2013
"EV manufacturers source their batteries from the cheapest bidder, which means lower profits, which means less R&D effort. " - Eikka

That principle is true for all manufacturing so by your reasoning no improvements in manufacturing are possible in a Capitalist, free market system.

In an effort to reduce the cost of production, research will be funded to improve battery performance.

This will be particularly true if the batteries cost a good fraction of the cost of the car. Which they currently do.
VendicarE
3 / 5 (2) Nov 18, 2013
"In the coldest climate you'll only need 2 or 3 Kw to heat up a car's cockpit, and electric motors are not 100% efficient." - italba

Resident Standford-U Kook and Hoover Institution crank, John McCarthy of Ear Flaps fame, (now dead), used to argue against electric cars on the basis that they couldn't heat the interior.

In fact, the electric motors used in these vehicles produce a fair bit of heat which must be removed from the motor by a cooling system, and which can easily be shunted to the passenger compartment.

John McCarthy refused to do the numbers, and as a result, was doomed to talk nonsense.
Eikka
1 / 5 (9) Nov 18, 2013
So they'll better burn oil in their cars instead of building more hydro, wind or tidial power plants?


No. It just goes to say that using more energy in Norway causes more CO2 to be emitted elsewhere. The whole argument about the energy supply is that it makes no difference whether the Norwegians are driving electric cars right now, because the emissions savings are offset by larger emissions elswhere. The electric cars only make a difference when the overall electric infrastructure is clean.

So, the subsidies are misguided - they don't help.

In Germany solar energy incentives have slow down the solar plants?


They've slowed down the development into solar energy in general, because instead of trying to figure out how to make something better, most of the producers have scrambled to sell what they already have at the minimum price.
Eikka
1 / 5 (9) Nov 18, 2013
That principle is true for all manufacturing so by your reasoning no improvements in manufacturing are possible in a Capitalist, free market system.


That is the paradox of capitalism. Yes.

In order for the market to be completely free and rational, information must be free, but when information is free it leads to copying and there is no incentive to invent because the inventor automatically loses in competition to other companies that don't have to expend the effort.

Hence why patents exist.

In fact, the electric motors used in these vehicles produce a fair bit of heat which must be removed from the motor by a cooling system


At low speeds, the waste heat output is just barely enough to heat the batteries. A car that uses up 250 Wh/mi travelling at 30 mph at 85% efficiency will output 1.13 kW of heat. Not all of that is recoverable, and it takes a long time before the system itself heats up to the point that you get warm air in the cabin.
Eikka
1 / 5 (9) Nov 18, 2013
These are not free cash incentives, are tax incentives. You have to pay before you get tax benefits. Why should you get old tech and high prices cars?


Because you stand to gain a free car as you deduct the expenses out of your taxes. It doesn't matter how much it costs when you would have had to paid that price eventually anyways.

Think about it. You get to choose to pay €91,000 in taxes over a few years to get nothing, or you pay the sum right now and get a car instead. Any rational person would choose the car.

Even though it's ridiculously expensive and almost useless to you, at least you get something for the money. Then you can sell the car to some other person and effectively dodge taxes. That's why people in Norway have actually been paying more for second hand Teslas than the new ones cost - they're tossing them around to get the tax benefits with no intention of actually driving the car.

Eikka
1 / 5 (10) Nov 18, 2013
no improvements in manufacturing are possible in a Capitalist, free market system.


Aside for patents, which btw. mandate that the crucial aspects of the invention are made public, the free market system is essentially working around a common problem. Nobody is willing to chip in for the fear that others take it and run away. Therefore they must conclude to fund research collectively or nobody can get ahead. This is not in contradiction with the capitalist free market pricinple. It's just one of the logical consequences of it.

Of course everyone is trying to cheat all the time, and use the government as a means to get out of paying the common cost. Don't tax me, tax that guy over there.
italba
5 / 5 (1) Nov 18, 2013
@VendicarE:
In fact, the electric motors used in these vehicles produce a fair bit of heat which must be removed from the motor by a cooling system, and which can easily be shunted to the passenger compartment
For what I know best brushless electric motors are 90% to 95% efficient, so every 10 Kw of energy you'll get 1/2 to 1 Kw of heat. You should add some spare heat from the electronic power control system, and that could be enough for a small car.
Otherwise, generating heat from electricity is not a problem!
Eikka
1 / 5 (10) Nov 18, 2013
Otherwise, generating heat from electricity is not a problem!


It is a problem if you're using 3 kW to heat the cabin and 5 kW to drive the actual car, beacuse it significantly reduces your range. It's not a problem at highways speeds, but your city mileage drops significantly with the heaters on.

Eikka
1.4 / 5 (10) Nov 18, 2013
but the desert mountainous Norway full of fjords near polar circle is something very different.


Anywhere the temperature goes below freezing, moisture in a car becomes a problem because the occupants carry water with them to the footwells and it evaporates and freezes on the insides of the windows and is generally a great pain to get rid of. If you just heat the passengers with seat heaters, even their breath soon condenses on the windows and blocks visibility.

Unless you have a garage, the only way to stop having to scrape your windows on both sides in the morning is to occasionally drive off the moisture by running the A/C until the car warms up all the way inside out.
italba
3 / 5 (2) Nov 18, 2013
@Eikka:
...using more energy in Norway causes more CO2 to be emitted elsewhere...
No, If Norwegians will keep building clean power plants up to their own needs
They've slowed down the development into solar energy in general, because instead of trying to figure out how to make something better, most of the producers have scrambled to sell what they already have at the minimum price.
That is your own opinion. If the request for an industrial product increase, so the research and development investments will.
...the waste heat output is just barely enough to heat the batteries...
You don't have to. Neither the batteries are 100% efficient, they will heat as you draw current.
...Then you can sell the car to some other person and effectively dodge taxes...
It's difficult to believe that Norway's tax people are so stupid. If you try something like that, you'll probably pay a very high fine.
Eikka
1 / 5 (9) Nov 18, 2013
No, If Norwegians will keep building clean power plants up to their own needs


Or, they could be exporting the new clean power to replace more polluting generation elsewhere instead of using it to power electric cars at home. Again, no difference.

That is your own opinion. If the request for an industrial product increase, so the research and development investments will.


Yes. Investments to the industrial process will increase, but not in the fundamental technology they're producing with it.

You have to consider what you're asking for: more solar panels, or better solar panels? Subsidizing solar panels will give you more of them, because it's easier and faster and immediately profitable to make more of them than make them better.

It's difficult to believe that Norway's tax people are so stupid. If you try something like that, you'll probably pay a very high fine.


They aren't. It's a perfectly legal loophole as it stands.
italba
5 / 5 (1) Nov 18, 2013
@Eikka:
It is a problem if you're using 3 kW to heat the cabin and 5 kW to drive the actual car, beacuse it significantly reduces your range...
There are auxiliary heat generators for cars, gas, diesel fuel or LPG operated.
@Pastello:
You'll need at least five to seven kiloWatts (but a twelve kilowatts is not an exception).
I don't live in Norway, in winter the temperature barely go under 0°C, but my whole house (it's little, but its volume is at least 100 times a car's cabin) is heated by a 11Kw natural gas burner, and I can easily get 20°C inside or more!
Eikka
1 / 5 (10) Nov 18, 2013
In essence, what happens with subsidies is this:

Suppose you want to buy shoes but all the shoes on the market are too expensive and have holes in them so they leak.

Instead of funding research into figuring out how to make shoes without holes on the cheap, you subsidize the shoes themselves by giving everyone who buys shoes a small cashback on their purchase in the hopes that it would liven up the sales and incentivize the shoemakers to develop better shoes.

But the shoemakers simply say "Thank you very much" and continue making more shoes with holes in them. Did you really expect them to do otherwise if they didn't have to?
goracle
1 / 5 (9) Nov 18, 2013
"In the coldest climate you'll only need 2 or 3 Kw to heat up a car's cockpit, and electric motors are not 100% efficient." - italba

Resident Standford-U Kook and Hoover Institution crank, John McCarthy of Ear Flaps fame, (now dead), used to argue against electric cars on the basis that they couldn't heat the interior.

In fact, the electric motors used in these vehicles produce a fair bit of heat which must be removed from the motor by a cooling system, and which can easily be shunted to the passenger compartment.

John McCarthy refused to do the numbers, and as a result, was doomed to talk nonsense.

Yes, but the ear flaps talked back, and they were very sympathetic.
goracle
1.4 / 5 (9) Nov 18, 2013
@Walters1:
The electromobiles http://www.nytime...ted=all, which is typical for Norway... the conditioning of car powered by batteries has a significant impact to mileage...
Why should you use air conditioning in cold climate?
... In addition, the electromobiles are still significantly more expensive...
Electric cars are more expensive NOW, when the numbers of electric cars produced will reach the number of petrol cars they will costs the same or less. In electric cars there are less parts then in petrol ones.
The Tesla cars are transported by air to their customers.
There is a particular reason for that? Maybe electric cars suffers sea or train trips?

At the price point for the Tesla, shipping by air is more reasonable than for a cheaper automobile. If you can afford a Tesla, the cost of shipping by air is not that big. It would be a different story if all you could afford was a Civic.
italba
5 / 5 (1) Nov 18, 2013
@Eikka:
Or, they could be exporting the new clean power to replace more polluting generation elsewhere instead of using it to power electric cars at home. Again, no difference.
No difference if moving electric power hundred of kilometers away would be without losses, and it isn't, and if a petrol car would burn the same energy per mile than a electric one needs, and it's not true again.
...Investments to the industrial process will increase, but not in the fundamental technology they're producing with it...
If this would be true we would never had transistors instead of vacuum tubes, lcd or oled display instead of plasma or CRT, digital photography instead of films. Every company that ever tried to keep with an old technology when a new one was rising is miserably failed.
They aren't. It's a perfectly legal loophole as it stands.

Are you a Norwegian lawyer?
italba
5 / 5 (1) Nov 18, 2013
@Eikka:
Anywhere the temperature goes below freezing, moisture in a car becomes a problem because the occupants carry water with them to the footwells and it evaporates and freezes on the insides of the windows and is generally a great pain to get rid of. If you just heat the passengers with seat heaters, even their breath soon condenses on the windows and blocks visibility.

Unless you have a garage, the only way to stop having to scrape your windows on both sides in the morning is to occasionally drive off the moisture by running the A/C until the car warms up all the way inside out.

Today's cars can be much improved in cabin's climate control and energy saving. We should have better insulated cabins, heat exchanger between incoming and outgoing air, infrared reflecting glasses. All these technologies already do exists, we only need to use them.
goracle
1.4 / 5 (9) Nov 18, 2013
Being at a high latitude with longer winters does not mean that one never needs to have air conditioning in a vehicle. Long summer days can get quite hot in a car, even in Canada and Norway, and there are plenty of reasons not to want to have your windows down in certain circumstances.
VendicarE
3 / 5 (2) Nov 19, 2013
"It is a problem if you're using 3 kW to heat the cabin and 5 kW to drive the actual car" - Eikka

It is, but since your assumption is selected by you, specifically to manufacture the problem, we need not consider it, need we?
VendicarE
3 / 5 (2) Nov 19, 2013
"We should have better insulated cabins" - Italba

"Impossible" the regresives will insist.Insulation will make cars more expensive, and when it burns it will produce poisonous smoke.

VendicarE
3 / 5 (2) Nov 19, 2013
"Yes, but the ear flaps talked back, and they were very sympathetic." - Goracle

McCarthy wanted ear flaps so that he could refuse to listen to people who were saying things that he didn't like.

It was just another form of Conservative isolationism, ending up with the isolationist living on Planet Conservadopia.

Now that I think about it, I have serious doubts about the possibility
of insulating a car, because of all the glass it needs. - John McCarthy
1996/02/28
VendicarE
3 / 5 (2) Nov 19, 2013
"Instead of funding research into figuring out how to make shoes without holes on the cheap, you subsidize the shoes themselves by giving everyone who buys shoes a small cashback on their purchase in the hopes that it would liven up the sales and incentivize the shoemakers to develop better shoes." - Eikka

I can't think of a single example of where Subsidies are used in the way Eikka states.

Subsidies for PV energy generation for example are there to promote the installation of PV electric plants, and to foster mass production and the benefits that come from the economy of scale.

Subsidies for Electric car production are another example, but in this case the goal is not to solve battery engineering problems (research on that problem is directly funded), the goal is to assist in overcoming the initial barrier to production and distribution.

Subsidies for American Sugar is another example, but in this case the goal is to damage the Cuban Economy by limiting the import of Cuban sugr.
VendicarE
3 / 5 (2) Nov 19, 2013
"You have to consider what you're asking for: more solar panels, or better solar panels? " - Eikka

Both of course. This is why subsidies exist to increase the bulk purchasing of solar panels. The more part, while direct funding of fundamental research on PV design covers the "better solar panel" part.

VendicarE
3 / 5 (2) Nov 19, 2013
"Nobody is willing to chip in for the fear that others take it and run away. Therefore they must conclude to fund research collectively or nobody can get ahead." - Eikka

So all innovation in the market is the result of collective industry research, ay....

It is of course almost always the exact opposite that is the case. One need only look at the Tech sector to see the silliness of your claim.
VendicarE
3 / 5 (2) Nov 19, 2013
"That principle is true for all manufacturing so by your reasoning no improvements in manufacturing are possible in a Capitalist, free market system."

"That is the paradox of capitalism. Yes." - Eikka

There is no paradox at all. Your reasoning is simply false, and leads to the false conclusion that there can be no progress in Capitalism.

VendicarE
3 / 5 (2) Nov 19, 2013
"EV manufacturers source their batteries from the cheapest bidder, which means lower profits, which means less R&D effort. " - Eikka

That principle is true for all manufacturing so by your reasoning no improvements in manufacturing are possible in a Capitalist, free market system.

In an effort to reduce the cost of production, research will be funded to improve battery performance.

This will be particularly true if the batteries cost a good fraction of the cost of the car. Which they do.
hangman04
1 / 5 (3) Nov 19, 2013
"EV manufacturers source their batteries from the cheapest bidder, which means lower profits, which means less R&D effort. " - Eikka

I won't debate the technological aspects and how emission dynamics shift at a global scale, but lets say you are right. This means that all manufacturers will buy the same range of low quality, low cost products and probably spending all the extra money ( the difference from state of the art expensive tech, embed in the price of the car and the old tech which is actually used in car manufacturing) probably in marketing, management bonus, higher quarter profits, other more profitable investments (annual car design change for "new models"). So the people will have to use these "crap" electric cars as the 1st generation. But the problem is because of competition and because no matter how good smth is (at least at a perception level), people get used to it and tend to ask for more, ofc at the same price.....
(tbc)
hangman04
1 / 5 (3) Nov 19, 2013
This means that other car manufacturers will try to get a bigger market share so either they will provide better tech at same price or same tech at a cheaper price, depending on the current development. And they will do this by putting pressure either on their own R&D or on their suppliers. Also same logic applies to the suppliers which want to get contracts.
So except the scenario where the demand is overwhelming that manufacturers just don't care, or in the case of cartel operations between market players, the quality of the products will gradually increase.

PS: also don't forget that both electric cars and hydrogen cars are in the phase of "manufacturing demand", and i think it will need at least 5-10 years before it will reach a maturity business cycle, so better keep your expectations low for the time being.
Eikka
1 / 5 (3) Nov 19, 2013
No difference if moving electric power hundred of kilometers away would be without losses, and it isn't, and if a petrol car would burn the same energy per mile than a electric one needs, and it's not true again.


Consider that powerplants are not efficient, and petrol produces less emissions than coal; the energy used to the EV can displace as much emissions elsewhere even after losses as what it would save in petrol at home. It's very close to being a zero sum game.

Subsidies for PV energy generation for example


Were supposed to drive development of PV so that it would produce more energy cheaper, but instead it encouraged Chinese manufacturers to produce last generation solar panels in masses, and while that did drive the price down due to economies of scale, it did not fundamentally shift the pricepoint of solar power because they're still producing too little energy for the price you pay.

The thin film, perovskite, grätzel etc. panels are still stuck in the labs.
Eikka
1 / 5 (3) Nov 19, 2013
The thin film, perovskite, grätzel etc. panels are still stuck in the labs - and they are stuck there because they can't initially compete with the last gen panels. A disservice was made in subsidizing something we ultimately didn't want to have.

Subsidies for Electric car production are another example, but in this case the goal is not to solve battery engineering problems (research on that problem is directly funded), the goal is to assist in overcoming the initial barrier to production and distribution.


The only initial barrier electric cars have is that they're not offering enough value for the investment - they're much too expensive to drive - and that is not going to change by buying more electric cars because the component that is responsible for the high price is the battery, and the electric car manufacturers aren't manufacturing the batteries.

So the profits go everywhere else except where they "should" go if you're wanting cheaper better electric cars.
Eikka
1 / 5 (3) Nov 19, 2013
This means that all manufacturers will buy the same range of low quality, low cost products and probably spending all the extra money


There is no extra money.

The problem is this: the car itself costs about the same to manufacture as an ordinary car. The electric motors and controllers cost about the same as an engine and the chassis costs about the same as any car chassis. The battery on the other hand costs as much as an entire other car. So they have to buy the absolute cheapest smallest battery AND have the government subsidies just to compete in the market with other cars. If they don't do that, they're not selling any.

Nissan for example is making next to no profit on the Leaf after all that.

Tesla bypassed the problem by making a luxury car for people with more money than sense, but for the same reason they won't be driving the battery markets forward because they're never going to sell those things in the millions.
Eikka
1 / 5 (3) Nov 19, 2013
.Investments to the industrial process will increase, but not in the fundamental technology they're producing with it...


If this would be true we would never had transistors ... Every company that ever tried to keep with an old technology when a new one was rising is miserably failed.


Only companies that have secured their place in the market can afford to research, because they don't have to compete. The transistor for example was invented in the Bell Labs owned by AT&T who had the absolute monopoly over telephones.

A company that researches has to keep higher prices than a company that does not research, so it automatically loses to companies that push out the same old same old but more cheaply.

And with the subsidy game nobody is building for the future, because the subsidies aren't forever and the more expensive companies will be the first to go when the subsidies are taken out.

Are you a Norwegian lawyer?
It's perfectly obvious that they're doing it
Eikka
1 / 5 (3) Nov 19, 2013
So all innovation in the market is the result of collective industry research, ay....


Much of the innovation in the market is by small startups and public institutions that either can't fail, or whom nobody cares for if they do fail, but a great deal of collective industry research happens as well. See for example the DVD or Bluray forums.

It is of course almost always the exact opposite that is the case. One need only look at the Tech sector to see the silliness of your claim.


The tech sector is a patents game. Somebody comes up with something new, they patent it instantly and start selling lisences. Then some company starts making the product at a high price, while everyone else waits for the patents to expire so they can make cheaper knock-offs.

Without patents, the whole system would grind to a halt
Eikka
1 / 5 (3) Nov 19, 2013
There is no paradox at all. Your reasoning is simply false, and leads to the false conclusion that there can be no progress in Capitalism.


it's not my reasoning. It is a well recognized paradox in free markets.

1. for the market to work optimally, you need rational consumers who can tell a better product from a worse product and choose the cheapest, best products and services in order to drive prices down to production costs.

2. for the consumers to make rational choices, all information must be available to them at no cost. Putting a cost on information causes a market failure in favor of the producers.

3. free information means all private research is futile because the results are immediately available to all competitors.

4. therefore under a perfectly functioning free market, nobody is making any profit, and nobody can do any research.

The situation is solved by deliberately causing a degree of market failure in favor of the producers by patents and rights etc.
Eikka
1 / 5 (3) Nov 19, 2013
PS: also don't forget that both electric cars and hydrogen cars are in the phase of "manufacturing demand"


Hydrogen cars are in demand of a fuel cell that doesn't cost a million to make and won't wear out in less than 5000 hours. It's essentially the same problem: nobody's going to buy them at the price they really are, and the price isn't going down because the research effort is going slowly.

What I'm trying to point out with all this is, that at any given level of technology you can make things "cheaper" by throwing subsidies at it, but you will ultimately do harm. If you make today's level of technology cheaper, you make the future level of technology less competetive once it arrives because it has to be that much more cheaper to start with, therefore pushing its adoption even further into the future.

So, fund research directly. Any extra money you push to companies is going 99% to anything but research anyways, so for a fraction of the public cost you get more faster.