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Oil Industry’s New Threat? The Global Growth of Electric Cars

In Oslo, a driving-school owner charges an electric Nissan Leaf, which is used in the school’s lessons.Credit Thomas Haugersveen for The New York Times

OSLO — “The Scream” was screaming, as usual, from the wall of the Edvard Munch museum one recent day. Out in the parking lot, Pal Valsgard wore a milder expression— a trace of impatience — as he gazed at his electric car.

He brushed away raindrops. Minutes ticked by as he waited by a green kiosk for the car to take a big gulp of power.

Mr. Valsgard was no technophile, just an English teacher trying to get his family to the airport for a jaunt to London, and he was running a little late. Nowadays, in this chic capital city, plugging an electric car into a shiny charging station is a routine experience, if a bit time-consuming.

Norway, one of the world’s leading oil producers, has become an unlikely proving ground for the proposition that electric cars are ready for prime time. Because of big tax breaks, they have come out of nowhere to seize a third of the new-car market in just five years. Politicians and business leaders from all over the world are trekking to this city to see if the trend is real.

Over the summer, leaders of Volkswagen, the German carmaker caught up in an emissions-cheating scandal, visited this very parking lot without fanfare to watch the action at the charging kiosk, announcing weeks later that electrification would be their recovery strategy. The company is promising 20 new models of electric cars by 2020.

Norway is a tiny country, just five million people, but the success of electric cars here is bringing a big question into focus. Could the world’s transportation system be on the verge of a disruption, one that could slow the growth of oil demand and eventually reverse it?

That question is not just profound, it is urgent. Nations have pledged to fight global warming, which means sharply paring emissions of carbon dioxide and other greenhouse gases by midcentury, just over three decades away.

If that is to be achieved, some studies suggest, there will be no place for cars burning gasoline or diesel. They will have to run on electricity, or possibly another alternative fuel, and the electric system itself will have to become much cleaner.

The studies suggest that electric cars must begin to take the majority of the world’s new-car market in the 2030s, becoming the default choice for most families. Leading oil companies and oil-producing states — Norway excepted — have been vocal in arguing that it will not happen.

As a business strategy, in other words, the big oil companies are counting on political leaders failing to meet their stated goals for limiting climate change. The stock market seems to be betting with the oil companies.

But out on the roads of several countries, things are getting interesting.

They are getting so interesting, in fact, that several countries — including Norway, Germany and the Netherlands — are talking, however tentatively, about the possibility of banning the sale of new fuel-burning cars. If enacted, such bans would likely not take effect until 2030.

Counting plug-in hybrids, more than 20 electric-car models are on the market. Sales are growing worldwide at a rapid pace: They jumped 49 percent in the first half of 2016 compared with the year-earlier period, according to EV Volumes, a global tracking database.

Electric vehicles being charged in Oslo last month. Credit Thomas Haugersveen for The New York Times

That fast growth is occurring from a tiny base, though, and the cars still represent far less than 1 percent of all cars on the road. Still, if such rapid growth were to continue, it is not hard to see how the cars could become a disruptive force within a few years. “These technology disruptions seem like they are not going to happen at all, and then they happen so fast you can’t keep up,” said Rami Syvari, head of international sales for Fortum Charge & Drive, which is racing to install car chargers in Norway.

Owners of electric cars, even as they acknowledge some problems and a bit of a learning curve, tend to gush with enthusiasm, saying the cars are inherently cleaner, mechanically simpler, easier to maintain and more fun to drive than fuel-burning cars.

“I love this car!” Lise Skauge, the owner of the ABC Traffic School here, yelled through her mobile phone as she drove the school’s Nissan Leaf, bought nearly five years ago. “It’s so good to be in a car that doesn’t make any noise. I think that’s maybe the best thing, and it feels very clean.”

The cars are especially clean in Norway, where most of the electricity comes from dams, not from burning fossil fuels. But even in countries that burn coal for power, the cars are so efficient they can cut greenhouse-gas emissions by more than half.

The vehicles have one huge problem, though: the battery that makes them possible. The limitations of available battery technology mean that the range of the cars has been limited, typically to less than 100 miles, or 160 kilometers.

But as the market grows, innovation in batteries seems to be taking off. Economies of scale are kicking in. A wave of new cars is coming over the next couple of years, with the manufacturers promising big improvements.

For instance, General Motors is on the verge of shipping the Bolt, a sporty-looking hatchback with a promised range of 238 miles. That is four solid hours of highway driving.

The new cars are expected to cost below $40,000, or 36,000 euros, and in the United States, federal and state tax credits for electric cars will in many places push that below $30,000. Leases are expected to be available at $200 a month, and electricity in most places is far cheaper than an equivalent amount of gasoline.

As of yet, rapid, mass-market adoption should not be considered the likely scenario, according to an October report from Fitch, the financial ratings agency. The oil companies are probably right to expect a long, slow increase for electric cars, the firm found.

But things are moving fast enough that the possibility of a real disruption can no longer be dismissed out of hand.

“In an extreme scenario where electric cars gained a 50 percent market share over 10 years, about a quarter of European gasoline demand could disappear,” Fitch analysts said in the report.

In the United States and abroad, there are signs that a significant fraction of the public wants to give the cars a try.

Tesla, the start-up carmaker headed by the entrepreneur Elon Musk, is promising a car with specifications similar to the Chevrolet Bolt, but with a snazzier design, that is expected to ship in 2017. To the auto industry’s astonishment, close to a half-million people have already put down $1,000 deposits in hopes of getting their hands on it.

At a charging station near Oslo’s Munch museum, the owner of a BMW electric car uses a Fortum Charge & Drive charger. Credit Thomas Haugersveen for The New York Times

Still, the hurdles for electric cars are enormous. Even if the cars improve as rapidly as the manufacturers are promising, large countries like the United States still have work to do to make them a practical option.

At the top of this trouble list is the chicken-or-egg problem of chargers. Because not enough people own electric cars, not enough public charging stations have been installed, which discourages people from buying the cars.

But Norway is battling its way out of this problem, with public money as well as heavy private investment going to put up fast charging stations the length and breadth of the country. California is making headway, too. New York is about to make a serious push on electric cars and chargers, and Massachusetts is already doing so.

In Norway, as elsewhere, the people already buying electric cars tend to have garages where they can charge at night. That usually gives them enough range for daily commuting. The problem is long trips, and the answer is fast chargers that can inject 50 or 100 miles’ worth of electricity in under 30 minutes.

It definitely takes longer than gassing up a regular car would. The drivers say you get used to that. The time required is about what you would need to stop for a leisurely coffee, or perhaps a fast-food meal. In Norway, this has not been lost on McDonald’s.

The company is offering its parking lots for the installation of charging kiosks, drawing a high-end clientele into the restaurants. “It’s fast food and a fast charge,” said Jan Haugen Ihle, the Norway manager for Fortum Charge & Drive, the company installing the big green kiosks.

It was at one of those kiosks the other day, outside the Munch Museum in a district called Toyengata, that the English teacher, Mr. Valsgard, was topping up his battery. Earlier, he had stopped by a McDonald’s to charge up, only to find the charger broken.

This sort of thing has been a problem, Mr. Ihle acknowledged. As electric car sales zoom in Norway, the chargers are in such heavy use that some of them do not stand up to the wear and tear. His firm has been pressing its suppliers to upgrade to heavy-duty components.

The charging delay accounted for Mr. Valsgard’s anxiety, as he was rushing to pick up his family and catch a flight. But afterward, by email, he reported good news. “I made it to the airport, and everything went fine,” he wrote.

For drivers like him, the interest in electric cars in Norway has been driven by big tax breaks, along with lots of small perquisites, like free tolls and the ability to use reserved freeway lanes. In countries with the fastest increase of electric cars, the tax breaks are about $15,000 per car.

The United States is not so generous, offering a $7,500 federal credit, but states like California are adding to that, so that the total incentives in some places are around $10,000 per car.

The need for the breaks would likely be temporary, given the rapid drop in battery costs. And as word starts to spread, people get enthusiastic about the cars. That has certainly been the experience of Ms. Skauge, the owner of the driving school here.

“I have to tell you that four of my pupils, they have bought the same car after driving our Nissan Leaf,” she said. “I’ve been working as a driving teacher for 20 years, and I’ve never seen this kind of interest in a car.”

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