Developing electric car market in Helsinki, Finland

Kateryna Bulavina Jutta Heinisuo Hang Le Tam Huynh

E-Car Project Sustainable Logistics and Supply Chain Strategies LOG3LF004 December 2012

Abstract Date of presentation Degree programme Author or authors Kateryna Bulavina, Jutta Heinisuo, Hang Le, Tam Huynh Title of report Developing electric car market in Helsinki Teachers Soile Kallinen, Minna Harmaala. Electric vehicle is growing more popular due to the affection of improving environmental sustainability. The project is studied to examine the current situation of electric vehicle (EV) in Finland and make recommendations to further uptake the EV market. Two leading cities, Kanagawa and Rotterdam, serve as the case studys source information for the project. Main findings from the illustrated cities show that e-mobility market has a value chain involving many stakeholders. They all share the workload to open, develop and operate the EV market efficiently and sustainably. The results clearly indicate the collaboration between public sector and private sector is needed. At early stage, state subsidiaries and other financial incentives are great tools to gather enough interests from other players to the field. Coming to later stage, as the market defines itself, market driven forces automatically run the game. Governments act is little or not needed in this stage. Group or year of entry GloBBA 10 Number of pages and appendices

Keywords

Table of contents
1 Introduction .......................................................................................................................... 1 2 General information about electric cars ............................................................................ 1 3 The development of green logistics as an academic discipline ...................................... 1 4 History of electric cars ......................................................................................................... 4 4.1 Beginning ...................................................................................................................... 4 4.2 Decline .......................................................................................................................... 4 4.3 Revival........................................................................................................................... 4 5 EVs pros and cons .............................................................................................................. 5 6 Industrial e-mobility value chain ........................................................................................ 6 7 E-cars in Finland .................................................................................................................. 6 8 E-car companies in Finland ................................................................................................ 8 8.1 Oliivi Autot Ltd ........................................................................................................... 8 8.2 ECars - Now! ............................................................................................................... 8 9 E-CAR in other countries ................................................................................................... 9 9.1 Electric cars in Kanagawa, Japan ............................................................................ 10 9.2 Another case from Rotterdam, the Netherlands .................................................. 12 9.2.1 General info about Rotterdam .................................................................... 12 9.2.2 History of EV development in Rotterdam ................................................ 13 9.2.3 Learning from past experiences, heading to future .................................. 13 10 Conclusion .......................................................................................................................... 14 11 References ........................................................................................................................... 15

1 Introduction
The aim for this project was to find out about the current situation of electric cars in Finland and in other countries. The chosen regions for this project were Japan and Netherlands. Japan was chosen because of its leading position in usage of electric cars. Netherlands is also a country where electric cars are more widely used comparing to Finland. Netherlands is geographically located quite close to Finland and that was also one fact that influenced choosing of that specific country. In Finland electric cars have now gained wide popularity. It is assumed that this is mainly due to the financial aspects. It was found out that the only benefits that one gets from government, money wise, is reduced parking fees and taxes. The reduction in taxes is applicable for the yearly tax that every car owner needs to pay and the price is determined by the emissions of the car in question.

2 General information about electric cars

An electric car is a vehicle that is run by one or more electric motor. The motor uses electrical energy that is stored in batteries or in another energy storing mode. Electric motors give electric cars instant force, creating solid and smooth acceleration. In many cases the electric cars are created by converting a gasoline-powered car. Looking from outside the car looks as a normal car would. Under the hood there are a lot of differences. The main thing is the engine. The electric motor gets its power from a controller which again is powered by the re-chargeable batteries.

3 The development of green logistics as an academic discipline

Green logistics is a relatively young academic discipline but it has been rapidly developed over the past 40 years. At the very beginning only physical distribution of the finished goods was considered. Nowadays the trends of overall environmental awareness, changing environmental regulations and standards led to the numerous topics of interest.
1

Therefore, green logistics is a battery of the several criteria in different re-search themes such as: Reducing freight transport externalities City logistics Reverse logistics Logistics in corporate environmental strategies Green supply chain management The research on all these topics began at different times from the mid-1960s. On the figure 1 on the next page you can see the chronology for the research on the themes listed above and the main trends that influenced this research. At the early time of the research public policy agenda was playing a big role. Environmental pressure groups lobbied the government in order to minimize damaging effects of the freight movement on the environment. With the course of time private sector had been involved in the research. The second trend is named operational-strategic. This trend was represented by a growing corporate commitment. The last trend is local-to-global. In 1980s global environmental impact of the logistics became the major issue. Before that only local air pollution, vibration, noise and some other effects of logistics activities were in the focus. (Mckinnon, Cullinane, Browne & Whiteing 2010, 5.)

Figure 1. Perspectives and themes in green logistics (Mckinnon, Cullinane, Browne & Whiteing 2010, 7).
3

4 History of electric cars

4.1

Beginning

An electronic car is not a new invention. Inventing of first electronic cars goes back all the way to 1830s. Even in the 1900s electronic cars were more popular than cars that run with gasoline. They were sound free, easy to use and did not pollute the environment. Even the first taxis in New York were electronic cars. There was a plan to start the mass production of electronic cars but it did not take place. (http://www.sahkoautot.fi/wiki:historia) 4.2 Decline Decline in demand of electronic cars began in the 1920s. It was due to need for longer distance vehicles as the system of roads grew and the reduced prices of gasoline which made it more affordable to purchase. An electronic starter was also invented in 1912 that made starting up the car easier for petrol cars as it had been before. Mass production of petrol cars began, initiated by of Henry Ford, and the prices of cars came down. After the mass production had started, cars were no longer seen as upper class goods. As a comparison, price of an electronic car was 1750 USD in 1912 while the price of a petrol car was only 650 USD. (http://www.sahkoautot.fi/wiki:historia.) 4.3 Revival General Motors introduced an electronic car, called Impact, in the 1990. Later it was named EV1. Impact made the Californian officials convinced about the technical maturity of electronic cars. The officials set up a law that would require car manufacturers to produce certain number of electronic cars (Cars with zero emissions). The percentage share of cars with zero emissions compared to the total number of cars was to be rising: 2 % in 1998, 5 % in 2001 and 10 % in 2003. Due to this law, several new cars were brought to market, for example: General Motors EV1, Ford Ranger pickup, Honda EV Plus, Toyota RAV4 EV, Nissan Altra EV and Chrysler EPIC minivan.
4

However, these cars are no longer in the market as the automobile industry started to object the new law. By 2003, the law was no longer valid. The industry appealed with the market having not enough demand for electronic cars. They also convinced the authorities that hydrogen cars would be in the market soon in the future and that those cars had better technical features. (http://www.sahkoautot.fi/wiki:historia.) The problem with electric cars popularity remains to be the high prices com-pared to petrol cars.

5 EVs pros and cons

Pros Dependence on fossil fuels reduced Decline in greenhouse gas production Easier on the environment Cleaner than conventional vehicles Fuel savings offset extra electric expense No threat to power grid Potential recyclability Cons Tethers drivers to an electrical outlet More expensive than conventional vehicles Responsible for power plant emissions Not as green as one might think Battery technology isnt ideal

The above table listed some advantages and disadvantages of an EV. By using EVs, people improve the environmental sustainability drastically. Because of highly efficient motor and electric generator, an EV can produce no tailpipe emission (Zero-emission Nissan Leaf). Driving electrically is also much cheaper than filling your car tank with gasoline. Thanks to comparable low energy price. It is estimated one can save 67 USD (51 EUR) per month by driving EV. There is no worry of power grid heavy loading at peak hours when people plug in their EV for a recharge. EV intelligent charging circuit handles the charging current efficiently so that current power line survives with heavy load pressure. However, EVs also face some limitations. Driving-a-lot drivers still have difficulties with charging scheme. Battery might be depleted in inconvenience time. In addition to this, EV offerings are still more expensive than its ICE counterparts. as of

12, 2012 an EV cost roughly 35% to 50% more. Energy produced by power plants for EV charging purposes is more likely to damage more to the environment if more fossil sources used. Furthermore, battery technology is still on-development phase to push EV as an complete substitute for conventional cars.

6 Industrial e-mobility value chain

The above figure describes the industrial e-mobility value chain with examples key players in Finland. Understanding of every aspects of the chain is so crucial that there will not be a viable e-mobility market if any block in the chain contains no sound business. To uptake the e-mobility market, the participation of many stakeholders such as government representatives, companies, research institutions is required at a coordinative stage. After the end of SIMBe project, as a continuation Electrictraffic.fi, EV service development project is gathering now 20 companies from various fields of operation attempting founding a company served as a charging service provider for EVs owners.

7 E-cars in Finland
In1990s a lot of Finnish municipalities and companies acquired electric vehicles. Post was the first electric car user in Finland. At that time Post had more than 60 e-cars in use called Elcat.
6

(http://www.ts.fi/uutiset/kotimaa/1074242397/Sahkoautot+havinneet+Suomen+liik enteesta+lahes+kokonaan.) Fortum had been made these cars on the basis of Subaru in the mid-1980s. But the company stopped producing Elcat and sold the company after Subaru stopped producing the car model used as a platform for the e-car. The last Elcat went out of use in 2006 (http://www.ts.fi/uutiset/kotimaa/1074242397/Sahkoautot+havinneet+Suomen+liik enteesta+lahes+kokonaan). Nowadays Post is using only one electric car Citroen Berlingon for mail delivery. Itella is using two conversion electric car Volkswagen Caddy since 2010. According to Statistics Finland 161 e-cars have been registered at the beginning of 2000. In 2011 only 104 e-cars were in private use. (http://www.ts.fi/uutiset/kotimaa/1074242397/Sahkoautot+havinneet+Suomen+liik enteesta+lahes+kokonaan.) In 2007 an open community devoted to develop high quality electric car conversions has been founded in Finland. In 2008 the community bought few Toyota Corolla in order to converse them to electric cars. In May 2011 eCorolla gets registered to road traffic. In 2011 Finnish car manufacture Valmet Automative with cooperation of American green car manufacturer Fisker Automotavi launched production of the plug-in hybrid sport sedan Fisker Karma. Nowdays auto laboratory of Helsinki Polytechnic Stadia is about to start manufacturing two-seat electric sports car called Era in cooperation with international companies. Another Finnish company AMC Motors Oy is designing and producing Sanifer electric microcars for European markets. The cars are manufactured in China.

8 E-car companies in Finland

There are few companies in Finland in the industry. This chapter will concentrate on the chosen two which are Oliivi Autot Ltd and E-Cars Now!. 8.1 Oliivi Autot Ltd

Oliivi Autot Ltd is Finnish company specialized in electric cars. They will launch a new concept which is the concept of communal driving. Their aim is to provide easy movement, make the communal usage of cars possible through decreasing the need for owning a car and bring a pollution free way of transport to the markets. (http://www.oliivi.org/en/what-is-oliivi.html.) Oliivi Autot Ltd is offering the electric car service mainly in two ways. They have the option to rent or buy a e-car. They also talk about the option that is described as a sliding option between these two mentioned. (http://www.oliivi.org/en/what-isoliivi.html.) They emphasize the benefit that the customers will receive cost wise. The starting price per day is 59 and the customer will pay by the distance and hours that the car is used. The advantage is greater for car users that do not need to use it daily or are only using their cars randomly. (http://www.oliivi.org/en/what-is-oliivi.html.)

8.2 ECars - Now! eCars Now! Is a Finnish community that is aiming to collect 500 car users and together convert their cars into electric cars. The focus is to make the cars more affordable to everybody. There are various professionals working on with the project. These experts are electric car experts, IT specialists and professionals of marketing and media. (http://www.sahkoautot.fi/hanke:esittely.) The project will aim towards a car that will fulfill at least the following criteria:

 Room for 5 passengers Price equitant to corresponding new car 150 kilometers with one charging 200 000 kilometers duration of the battery Top speed of 140 km/h Acceleration better than petrol or diesel car Cost of usage only one third or less compared to other than electric cars Modern safety gear (http://www.sahkoautot.fi/hanke:esittely.)

9 E-CAR in other countries

Electric vehicles (EVs) are becoming increasingly popular, as people and cities all over the world have started recognizing their advantages and introducing initiatives to promote the use of the plug-in transport option. The mass deployment of EVs requires transportation systems capable of integrating and fostering this new technology. A number of major are pledged to making electric mobility a reality. Many cities and regions have already added electric vehicles to local fleets and incorporated hybrid buses into public transportation. They are actively pursuing ambitious goals through a variety of innovative policy measures and programs. While these approaches are often adjusted to each citys specific circumstances, many common practices emerge. For instance, many cities apply a mix of financial and non-financial consumer incentives to boost demand for vehicles and charging infrastructure. They are placing charging sports at public buildings and, in some cases, offering discounted electricity rates for EV users from municipal-owned utilities. Financial incentives include refunds or tax credits on vehicles (often paired with national government purchase subsidies), exemptions from vehicle registration taxes or license fees, discounted tools and parking fares, as well as discounts for recharging equipment and installation. A variety of non-financial motives figure are notable, in-

cluding privileged parking lots, access to restricted highway lanes, and expedited permitting and installation of electric vehicle supply equipment. Following are the top 10 cities have the most electric cars running on their streets: 1. Kanagawa Prefecture, Japan 2. Los Angeles, USA 3. Shanghai, China 4. Portland, Oregon 5. Rotterdam, Netherlands 6. BrabantStad, Netherlands 7. Amsterdam, Netherlands 8. Barcelona, Spain 9. Berlin, Germany 10. Hamburg, Germany (Transport, Greenbang 2012)

9.1

Electric cars in Kanagawa, Japan

Kanagawa Prefecture is a prefecture located in the southern Kant region of Japan. It is part of the Greater Tokyo Area and the capital is Yokohama. Its area is 2,416km2 with 9,072,133 of the population. (2012) Kanagawa Prefecture (K.P.G.) features many automobile and battery production facilities, as well as several universities and institutes that are conducting research and development of automobile technology and power generating units. In 2006, the Kanagawa EV Promotion Council, comprised of government K.P.G., industry and academia, was established to develop and promote the EV technology. The Council has continued deliberations on concrete measures for EV promotion. According to the EV City Casebook, Kanagawa Prefecture, Japan which includes the cities of Yokohama and Kawasaki is the most successful EV region. Of all 3,055,966 registered cars in the area there are 2,183 electric (in 2011). The local authorities aim to have 3,000 EVs or 0.1% of the current vehicle population on the road by the end of
10

2013, and seeks to establish 150 fast recharge centers throughout the area which is a modest objective considering that more than 3,000 hybrids were sold within the first five years of their introduction to the market. The objective is to create an environment where the rate of electric vehicle sales will equal or surpass hybrid adoption. The prefecture of Kanagawa launched a model project, the first of its kind in Japan, to promote the use of EVs as a possible solution for environmental and resource issues. Under the project, being implemented from September 19, 2009 to March 19, 2010, the prefecture uses two rented EVs for official use on weekdays, and then rents them out to residents on weekends and national holidays. The two popular EV models are the i-MIEV from Mitsubishi Motors Co. and the Subaru Plug-in Stella from Fuji Heavy Industries Ltd., with sales of both launched in July 2009 in Japan. Nippon Rent-A-Car and Mazda Rent-A-Car Times Station are in charge of the rental service operations. The weekend rental fee can be as low as 5,250 yen (about U.S $57), including tax, for the first three hours, thanks to the prefecture's weekday rentals. The immediate aim of the project is to give people the chance to experience driving an EV. Kanagawa Prefecture Government (K.P.G) provides subsidies, tax breaks and other incentives to reduce initial user burden and to improve convenience. To be specific, K.P.G examines provision of loans for purchasing EVs in the prefectural loan program for small and medium-sized companies through financial institutions. K.P.G encourages banks and other financial institutions to develop financial instruments, for instance low-interest loans for those who purchase EVs. It also stimulates casualty insurance companies, etc. to develop insurance products of inexpensive premiums for EV users. The national government provides a subsidy equal to 50% of the cost differential between an EV and a gasoline vehicle. Particularly, K.P.G raises the other half of this subsidy and provides tax relief for automobile tax (for 5 years) and automobile acquisition tax by 100%. Additional incentives include half-price discounts for prefectural tolls and parking charges under the jurisdiction of K.P.G. and half-price discounts for expressway tolls within the prefecture (EV City Casebook, 2012). With a target of having 3,000 EVs on the road by the end of 2013, Kanagawa is working to promote the use of EVs through a variety of measures, as it is one of the "EV &

11

pHV Towns" (pHV stands for plug-in hybrid vehicle) designated by the Ministry of Economy, Trade and Industry, a program aimed at promoting the use of eco-friendly cars (Kanagawas Efforts at Promoting EVs, Kanagawa EV Promotion Council 2008). In late 2011, Kanagawa displayed 109 Direct Current (DC) quick chargers and 341 100 and 200-volt outlets. K.P.G aims to install 100 more DC quick chargers and 1000 100 and 200-volt outlets in the prefecture by the end of 2014. To reach this goal, K.P.G is offering subsidies to the companies who will install DC quick chargers at gasoline stations, convenience stores, shopping centers, etc.(EV City Casebook, 2012). In collaboration with the members of the Kanagawa EV Promotion Council, K.P.G holds events where participants can test-drive EVs. This allows K.P.G to examine and carry out model projects and to give prefectural citizens the opportunity to experience the high performance of EVs. Comparing the case of electric cars in Japan and Finland, it can be seen clearly that Finnish companies have been applying some certain kinds of electric cars and putting efforts to bring more electric cars to public use. However, the electric cars companies in Finland are trying to develop the electric cars market by themselves while in Japan there are promotions, campaigns and especially a great incentives from the government in both financial and charging infrastructure. Besides, thanks to the governmental support, there are also collaborations among car firms to together release new models, build more charging spots, parking lots, or organizing events, etc. And this can lead to a strong motivation of switching to use electric cars in Japanese public. 9.2 Another case from Rotterdam, the Netherlands 9.2.1 General info about Rotterdam Rotterdam is the second largest city in the Netherlands and the third largest port in the world. Acting as Gateway to Europe, the location of Rotterdam is a strategic transportation hub throughout Europe with massive rail, road, air and inland waterway distribution system. With over 211 thousand registered vehicles, 3.5 billion kilometers are driven yearly in Rotterdam region by cars and trucksEL. This demands significant carbon emission reduction in the area and provides a potential development ground for electric vehicles.

12

9.2.2 History of EV development in Rotterdam In 1998, city of Rotterdam participated in 3 projects: ELCIDIS (March 1998 - August 2002) - Greening 3 largest parcel and package transportation companies small van fleet from urban distribution centers. E-TOUR - Replacing cars, conventional scooters and mopeds with electric two-wheelers in commuting and service trips PREVIEW (1999 - 2004) Exploratory test for e-fleet in municipality and companies The first two projects (ELCIDIS, E-TOUR) were not successful as expected but they were valuable lessons for future development. E-TOUR projects faced problems with limited operating range but its recommendations gave electric bicycle manufacturers very good input source leading to successful electric bikes. Almost 120 thousand electric bikes were sold in 2008. ELCIDIS failed because of immature battery technology. The companies had to wait for a more developed battery technology to improve their fleets performance. PREVIEW was the only successful one. All users were satisfied with 16 electric cars bought for municipal departments and companies. However, more electric cars for the projects implementation were not available due to markets unavailability. 9.2.3 Learning from past experiences, heading to future City of Rotterdam is now putting more efforts in stepping further with e-mobility development. Rotterdam will put a total of 14 million euros so that it highly uptake the market. Rotterdam is now having 80% of its public transport driven by electricity. Other short term projects including buying and introducing more EVs (scooters, Tuk Tuk cabs,... ) are going on too. Charging spot grid is expanding with public lands, semipublic lands also in privately owned lands with subsidiaries to reach its 1400-charging stations- by- 2014 goals. An EV experience center is also in place of enabling consumers test-driving sustainably many electric cars from different brands. EV buyers are exempt from vehicle registration tax, provided with free parking slot in the city centers. Innovators can apply for grant and subsidiaries for projects on EV to improve current technology and reduce cost.
13

10 Conclusion
To uptake the market, both studied cities have implemented various tools that would be a good reference for Helsinki.

14

11 References
Mckinnon, A., Cullinane, S., Browne, M. & Whiteing, A. 2010. Green logistics. Improving the environmental sustainability of logistics. The Chartered Institute of Logistics and Transport. UK. Kanagawa EV Promotion Council March 2008. Kanagawas efforts at promoting EVs. URL: http://www.pref.kanagawa.jp/uploaded/attachment/13200.pdf. Accessed: 10 November 2012. Cleantechnica 11 November 2012. The Most Successful Electric Car Cities (+ Inf graphic). URL: http://cleantechnica.com/2012/11/11/the-most-successfulelectric-car-cities-infographic/. Accessed: 10 November 2012. JFS 17 January 2010. Kanagawa Prefecture Renting Out Electric Vehicles for Official and Resident Use. URL: http://www.japanfs.org/en/pages/029648.html. Accessed: November 10 2012. JRI 10 September 2009. Implementation of "EV Sharing Model Business" in Kanagawa Prefecture to promote wider use of electric vehicles (EV) in the private sector. URL: http://www.jri.co.jp/english/release/2009/090910/. Accessed: November 10 2012. URL: http://en.wikipedia.org/wiki/Electric_car. Accessed: 5 Nov 2012 URL: http://lib.tkk.fi/Dipl/2010/urn100338.pdf. Accessed: URL: http://inventors.about.com/od/estartinventions/a/History-Of-ElectricVehicles.htm. Accessed: URL: http://www.sahkoautot.fi/wiki:historia. Accessed: 5 Nov 2012 URL: http://www.ts.fi/uutiset/kotimaa/1074242397/Sahkoautot+havinneet+Suomen+liike nteesta+lahes+kokonaan. Accessed: 7 Nov 2012 EV City Casebook 2012. A look at the global electric movement. URL: http://www.iea.org/evi/evcitycasebook.pdf. Accessed: 10 November 2012. URL: http://ecars-now.wikidot.com/. Accessed: URL: http://www.amcmotors.fi/index.php?page=AMC. Accessed:

15

URL: http://www.tekniikkatalous.fi/innovaatiot/article59062.ece. Accessed: URL: http://invcapital.com/pub/BMcanvas/index.htm. Accessed: World Electric Vehicle Journal Vol 3 - Rotterdam, city of electric transport Oliivi Autot Ltd webpages. URL: (http://www.oliivi.org/en/what-is-oliivi.html) Accessed 9.12.2012 eCars Now! webpages. URL: http://www.sahkoautot.fi/hanke:esittely Accessed 9.12.2012 eCars Now! webpages history: URL: http://www.sahkoautot.fi/wiki:historia Accessed 9.12.2012

16