Burgeoning electric car market on uphill road

Automotive

Though still a fledgling niche worldwide, the electric automobile market is expanding and its full potential has yet to be tapped. Slowly, plug-in cars are also gaining ground in Hungary, and the government says it is aiming to create further incentives.

It is still a rare phenomenon to see a fully electric vehicle, let alone a hybrid, rolling near silently along the roads of Budapest, even though the technology is widely considered a key tool for achieving landmark environmental goals in the European Union and other parts of the world.

“Currently, few people are opting for this mode of transport, because electric cars are expensive, they are limited in range and the service infrastructure needs further expansion,” the press department of the Agriculture Ministry, which oversees environmental questions, told the Budapest Business Journal.

In a classic ‘chicken and egg’ scenario, the muted level of market demand is the main reason behind the limited availability of the necessary infrastructure, like filling stations, which circles back to the low number of cars on the road.

Hungary, with its handful of publicly available filling stations, is far from what the European Union deems adequate. According to a European Commission proposal from early 2013, Hungary should ideally have 7,000 filling terminals by 2020, the number deemed sufficient to promote the spread of alternative fuels within the EU.

Electrifying
But at least there are attempts: Germany-based energy group RWE, the parent of the ELMŰ-ÉMÁSz group, announced this January that it will be installing 10 additional filling points above the handful it already has in operation.

The company is optimistic that there will be more of the better-selling cars operating on the roads of the capital, including the most popular model, the Nissan Leaf, and even Tesla models, which represent the peak of the electric car league.

ELMŰ-ÉMÁSz piloted the spread of electric infrastructure by installing the first few nodes, which motorists may use free of charge until the end of 2014. The newly announced charging points will also be fitted with improved technology that could significantly reduce the time a single charge takes.

ELMŰ-ÉMÁSz found that, over the course of a year, demand has notable increased for its stations. In the last quarter of 2013, motorists charged 2,217 kilowatt-hours of energy compared to 148 kWh in the same period of 2012. The growth is tangible, but in all fairness, it still doesn’t even amount to 100 top-ups a month.  

Set to take off
That doesn’t mean there isn’t room for growth. In fact, there are projections that the sales of electronic cars will see a huge boom in the coming years. Technology market data provider ABI Research said in October of 2013 that electric car sales will increase 48% each year until 2020, meaning there will be 2.36 million electric cars sold at the final year of the decade globally.

ABI conceded that, thus far, sales have been disappointing, but noted that there are now initiatives that could potentially bring about changes. In the United States there are subsides available for developing the infrastructure related to the operation of electric cars. In Germany and the Netherlands, owners of electric cars are eligible for cuts or exemptions for various vehicle-related taxes.  

Similar provisions are also in effect in Hungary, the ministry explained: new electric vehicles are exempt from the registration tax, are eligible for parking fee discounts, and the government is generally supportive of the greater spread of electronic vehicles because of their environmentally friendly operation.

Asked about additional involvement by the state in promoting plug-in cars, the ministry said further incentives are being considered, although it provided no further details.

However, Prime Minister Viktor Orbán has recently talked about the prospect of giving electricity a greater role as a fuel in road commerce. He referred to the availability of significant quantities of cheap energy from the expansion of the Paks nuclear power plant that could be utilized to support the “electrification” of road travel. This is also part of the country’s energy strategy, approved in 2011.

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