The Analysis of the Preparedness for the Green
Mobility Transportation in the Czech Republic and
its Additional Comparison With Already Functioning
Green Mobility in the Netherlands
Thesis
by
Nikol Medunová
Submitted in Partial Fulfillment
of the Requirements for the Degree of
Bachelor in Science
In
Business Administration
State University of New York
Empire State College
2015
Reader: Tanweer Ali
Acknowledgments
I would like sincerely thank my greatest mentor Tanweer Ali for helping me, leading me,
guiding me, and supporting my odd topic about green mobility. Professor Ali was a great
mentor who always appeased me with the inflow of positive energy and the belief that
made me trust in myself and work hard. I would also like to thank Petr for inspiriting and
influencing me to the greatest extent in the choice of topic for my thesis. Finally, I would
like to thank to my great mother, who surrounded me with love and support, alongside my
father and sister. As well I would like to thank Ali Dayekh for being patient with me during
my stressful time and for his guidance. The greatest thanks however belongs my great
liberator, deliverer, emancipator; salvation, Alex, who literally saved me by his excellent
proof reading.
Table of Content
1. Abstract
2. Introduction ………………………………………………………………… 7
3. Green mobility ………………………………………………………………8
3.1. Definition of green mobility
3.2. Three dimensions of sustainable transportation
3.2.1. Ecological dimension……………………………………………9
3.2.2. Economic dimension……………………………………………11
3.2.3. Social dimension………………………………………………..14
3.3. Current types of green mobility……………………………………......16
3.3.1. Natural gas cars
3.3.2. Electric cars……………………………………………………..21
3.3.3. Fuel cell cars …………………………………………………....26
4. The Czech Republic ………………………………………………………..29
4.1. Description of the Czech Republc
4.1.1. Economy
4.1.2. Political system ………………………………………………...31
4.1.3. Legislative system
4.1.4. Analysis of oil prices and excise tax……………………………33
4.2. Mobility in the Czech Republic…………………………………..……35
4.2.1. Description of mobility in the Czech Republic ………………..35
4.2.2. Green Mobility ………………………………………………...37
4.2.3. Narodni akcni plan cista mobilita (National Active Plan Clean
Mobility).........................................................................................38
4.2.4. Electric mobility in the Czech Republic ……………………....40
4.2.5. Natural gas mobility in the Czech Republic …………………..50
4.2.5.1.
CNG mobility
4.2.5.2.
LPG mibility...................................................................54
4.2.6 Hydrogen Fuel Cell ....................................................................55
5. Application of Porter's Five Force Model to the Czech car industry………56
5.1. Porter’s Five Force Model definition
5.2. Degree of rivalry.....................................................................................58
5.3. New entrants...........................................................................................60
5.4. Threat of substitutes................................................................................61
5.5. Bargaining power of buyers....................................................................62
5.6. Bargaining power of suppliers................................................................63
6. Green mobility in Netherlands.......................................................................65
6.1. Government support
6.2. Effect of government incentives............................................................69
7. Conclusion....................................................................................................71
1. Abstract
The aim of this analysis is to inform the public and potential investors about the current
situation of green mobility in the Czech Republic. It is important to mention that in order to
achieve better conditions of living, emission restrictions are expected to tighten in the
future, and thus there is a great potential in the transformation to green mobility. This paper
aims to give a brief overview of green mobility and the sustainable transport. Further, the
three main available types of current green mobility, natural gas, electric cars and hydrogen
cars, will be introduced.
The description of the Czech Republic provides the information about the location,
economy, politic system and legislative system. Examining the legislative system is
important in order to estimate the length of the enactment of the bill Národní akční plán
cista mobilita, which supports green mobility. Further, mobility on its own, incuding the
green mobility and its current situation, as well as the prediction of green mobility in the
near future (in the case of passing law Narodni akcni plan cista mobilita, the only document
so far supporting the green mobility in the Czech Republic) is examined. The application of
Porter’s five force analysis on the ecological car and new car industry enables a general
overview of the profitability and expectations of current car industry. At the end of this
analysis will be introduced an ongoing raw model for green mobility in the country with the
highest market penetration of ecological cars, the Netherlands. In the conclusion the
preparedness for green mobility transportation in the Czech Republic and its additional
comparison with already functioning green mobility environment in the Netherlands will be
evaluated.
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2. Introduction
Due to globalization and increasing population consistently, the world is facing a growing
demand for energy. Currently, the world population accounts for 7.3 billion and it is
assumed to increase to approximately 9.1 billion by the year 2050. Thus the question of
better energy utilization of today’s society needs to be solved as soon as possible. This
analysis aims to underline the transportation industry’s contribution to soiling the
environment and the available ways of clean mobility. Transport predominantly relies on a
single fossil resource, petroleum, which supplies 95% of the total energy used by world
transport (Riberio 325). As this is an astounding figure considering that petroleum fuels
create harmful emissions such as carbon monoxide, nitrous oxides, and particulate matter,
all of which degrade the environment. If society does not start changing its approach, the
globe is going to face a serious problem in the future. However, during the last decade,
decisive steps have been done to encourage clean and energy-efficient technologies in
many countries around the world. As an example can be the Kyoto Protocol, European
Strategy 2020, or the COP 21 Conference taking place in Paris at the beginning of
December 2015. These conferences’ aims are to achieve a legally binding and
comprehensive concession on climate, as well as promote efficient utilization.
As Trigg and Telleen write in their research paper funded by the EU, “Global Electric
Vehicles Outlook” claims, “Achieving sustainable transportation has emerged as a vital
mission” (7). Green mobility, particularly presented by electric mobility and natural gas
8
mobility, represents one of the most promising ways to enlarge energy security and
decreased emissions of greenhouse gases and other pollutants.
3. Green mobility
3.1 Definition of green mobility
Green mobility, which is also called clean or low emission mobility, could be considered as
a synonym for sustainable transport in the meaning of social, environmental and ecological
conservation. The aim of green mobility is to replace the high dependence on mineral
resources by providing more ecological and available reserves; such are electricity,
liquefied petroleum gas or liquid petroleum gas (LPG or LP gas), compressed natural gas
(CNG), and hydrogen fuel cells or biofuels, and at the same time decrease the amount of
harmful gases coming to the air. Transportation on its own has had a significant
contribution in the soiling of our environment. A professor Michael Bethe et. al from
Louvain School of Management Research Institute states, “Transportation is responsible for
23% of world energy-related greenhouse gas emissions with about three quarters coming
from vehicles” (325).
3.2 Three dimensions of sustainable transportation
As Professor of Conservation and Development from the Department of Geography,
University of Cambridge, UK, W.M.Adams claims, the core of mainstream transportation
sustainability thinking has become the idea of three dimensions: environmental, social and
economic sustainability (2).
9
3.2.1
Ecological dimension
As Professor Rebecca B Hole from the University of Southampton and her colleague J.
Smith states in their book Transport and Development: Conceptual Frameworks, “The
ecological dimension is concerned with the impacts of transportation on ecological
systems, such as the atmosphere, the hydrosphere and the ecosphere” (17). Bethe writes
that, “The measuring value of the level of pollution is done by the amount of emissions in
the air. In the year 2004, the transportation sector produced 6.3 GtCO2 emissions, from
which road transport accounted for 74%, in which the share of non-OECD countries was
36% (325). He also thinks, “There is a prediction that this number will even increase up to
46% by 2030 in the case that current trends continue” (325). These numbers are alarming
and suggest the immediate need for change. Nevertheless, some institutions are aware of
the impact that ever-increasing emission values might bring. The United Nations, for
instance, brought forth the Kyoto Protocol, an international treaty committing State Parties
to reduce greenhouse gases emissions. So far, the protocol has been signed by 37 countries
bound with targets (“Kyoto Protocol”). The European Union, fighter for a better
environment, has also signed the Kyoto Protocol. However, in many cases there are issued
documents; as professor Rosario Ferra from the Department of Law, University of Turin,
Lungo Dora Siena suggests that there “Are often in the form of soft law propositions with
the simple aim of introducing medium-to-long-term targets. Such soft laws are
subsequently followed by more binding regulatory measures, with a goal to provide stable
provisions to the general principles of conservation” (7). As an example of such laws, we
could look to “Smart Cities & Communities” and “Intelligent Energy Europe Programme”
10
issued by the European Commission (Ferra 8). However, the issue of these documents is
that they are on the basis of soft law. This means that they are not legally binding, thus they
are considered as some kind of recommendation or incentive that is supposed to promote
and forward the idea of a more ecological future.
The aim of the first report, “Smart Cities & Communities”, is to outline the most
advantageous, virtually perfect example of a smart city (“Cohesion Policy 2014-2020”).
Such a smart city is supposed to be a combination of economy and ecology, and thus there
would be the possibility to implement unity between the protection of the environment and
the development of new technologies including policies of environmental sustainability.
The second report, “Intelligent Energy Europe Programme”, focuses on sustainable
mobility in an urban transport environment, as well as on lowering the amount of emissions
and to the better use of resources that would lead to more efficient and ecological transport
networks.
The sustainability of smart cities appears to be a direct consequence of the EU Strategy 2020-20, a so called “climate package” that aims to reduce greenhouse gases by 20 to 30%
(“Cohesion Policy 2014-2020”).Compared to other such documents, as, for instance,
“Smart Cities & Communities” and “Intelligent Energy Europe Programme”, the EU
strategy 20-20-20 is a collection of legally binding legislation to make sure that the EU
redeems its climate and energy targets for the year 2020. As is stated in the European
Commission website, “The targets of package 2020 were set by EU leaders in 2007 and
were enacted in legislation in 2009” (“2020 Climate & Energy Package”). EU Strategy 2020-20 contains legally binding directives like the condition for car producers to decrease
11
the amount of CO2. As the Deputy Minister of Industry and Trade, Muřický says in the
interview for Euro Active, “All of the car producers would need to decrease the amount of
emission in their cars to 95g CO2 per one kilometer until the year 2020” (Denkova).
In the case that the car production companies do not meet the conditions, they would have
to pay a fee. On the other hand, car companies producing cars that exhale less emission
than 50g CO2 per kilometer would be supported by the advantage of doubling their credit.
The aim of this double calculation is to support production of those car production
companies who make hybrids and electric vehicles that have very low emission.
However, the recent example of Volkswagen, who created a device component for new
cars that would intentionally cheat the emission tests, can be used as example. This was so
that Volkswagen would be considered as a company producing ecological cars with low
emissions, and as a result would avoid additional payments for fees.
The ecological dimension also considers a wide array of externalities, such as noise and
land use noise limitation, which is strongly connected with the presence of electric cars
since they are the very quiet and at the same time ecological way of personal transportation
However, this field still requires research, development and plenty of innovation, given that
electric car transportation is still very limited by its high cost.
3.2.2
Economic dimension
This section is concerned about mobility and its associated costs; the financing,
construction, and the maintenance of transport modes and infrastructures (Hoyle 17). It also
contains the subsidies necessary for the support of faster development of green, ecological
mobility. One of the most formidable funds is part of the European Program 2020 and
12
supports research and development of low carbon technologies; it is called Horizon 2020.
As it is written on the website of European Commission, Horizon 2020 is the biggest EU
Research and Innovation Programme ever, with nearly €80 billion of funding available over
seven years, from 2014 to 2020 (“What is Horizon 2020?”).
It is important to note that transport activity, a key component of economic development
and human welfare, is increasing around the world as economies grow. However, when
considering more ecological and sustainable transportation, it is necessary to realize that it
is still a very costly issue, especially in the case of electric cars that are so far very
expensive to run but produces zero emissions. The barrier that stands before the
transformation is unfortunately the high price of a crucial component, batteries. Thus the
complete changeover towards more ecological zero pollutant vehicles usage relies on the
matter of research and development, hence it could be seen as a long-term activity. As the
research of the University Transportation Center at Michigan Technological University
claims
short-term
activity
often
promotes
incremental
improvement
in fuel
efficiency and vehicle emissions controls while long-term goals include migrating
transportation from fossil-based energy to other alternatives such as renewable energy and
use of other renewable resources (“Helping to Build a Safe and Sustainable Transportation
Infrastructure”). By “renewable energy”, it is meant the electric energy that can be gained
from inexhaustible sources; such are, wind (wind turbines), sun (solar panels) or water
(hydroelectric power).
Part of the economic dimension is also monitoring the spending on the transportation.
Figure number 1 shows equivalent Electric Vehicles Initiative countries in terms of fiscal
expenditures.
As it is seen, the priority of spending is in research development and
13
deployment sector. Similarly, significant funding is directed to fiscal spending, including
consumer incentives (Trigg & Telleen 16). These subsidies will come to an end eventually,
but in the short term they are aiding electric vehicles development, and figure prominently
in many vehicle electrification efforts worldwide. The government have considerable role
to play in research development and deployment and fiscal incentives.
Nowadays, when the price of clear mobility - in other words, electric cars - is still
considerably expensive, preformation of electric cars is dependent on government support
on both its demand and its supply. “Well-designed financial incentives for consumers at the
national and local level are lowering upfront costs for electric cars, quickening sales and
infrastructure deployment in a number of global markets” (Trigg & Telleen 16). Elaborated
incentives gives both businesses and consumers confidence in market advancement.
Achieving such sustainable transport has emerged as a vital mission, since many advanced
ways of transportation has been discovered.
14
Figure number 1. Showing Spending by Electric Vehicles Initiatives, 2008-2012
(Trigg &Telleen 16)
3.2.3
Social dimension
As Yugendar, from the Department of Philosophy at Osmania University, Hyderabad
states, “Social sustainability has had considerably less attention in public dialogue than
economic and environmental sustainability” (58). However, it is in fact very important
because it has influence on social development; especially in transportation which belongs
in current days to key important services in everyday life that helps people to overcome
local disadvantages and gain access to better jobs, education, facilities and services. As
Chair Professor in the Department of Civil Engineering the Indian Institute of Technology,
New Delhi, Geetam Tiwari states, “Urban transport systems development, planning, and
operations evolve to meet the mobility needs of the society” (6). However, green mobility
is unfortunately still in the process of emerging. For instance, in the case of electric cars,
15
people are still uncertain about their purchase because of the overall low range (distance
that the car can reach with one charge) and the expensive price of batteries. All of these key
decision-making factors are connected with the condition and improvement of the battery,
and are still in evolution. As long as the battery price remains high, the target market is
naturally going to be limited. Thus electric cars will be present only in the households or
companies that can afford it. However, the purchase of electric vehicles might be supported
by the state support in the form of government incentives. A great example of an EU
country that has perfectly handled such way of support is certainly the Netherlands. Jeff
Cobb from the Journal Hybrid Cars in his article, Top 6 Plug-In Vehicle Adopting
Countries writes, “The Netherlands reached a market penetration for highway-capable
plug-in electric vehicles for around 1.71 vehicles per 1000 people, over three times as high
as the world´s two largest plug-in electric vehicles markets, the United States and Japan”
(1). The case of the Netherlands may act as a great example of how government support has
broken people’s fear of changeover towards new, innovative, more ecological way of
transportation. The state can definitely help to diminish people’s fear from electric mobility
by investing into the development of the net of power stations enabling mobility. Thus the
fear from lack of electric power would be overcome. Another way to increase the overall
interest of green mobility is to make state and corporations set an example for other people
by the renewal of their current fuel vehicles to more ecologically friendly vehicles.
Corporations might exploit such renewal for their corporate social responsibility marketing
initiatives campaigns. Meaning “initiatives to assess and take responsibility for the
company's effects on environmental and social wellbeing” (Ferrell 67). As mentioned, one
of the countries that realized the growing importance of changeover towards green
mobility.
16
3.3 Current types of green mobility
Green mobility contains electricity, liquefied petroleum gas or liquid petroleum gas (LPG
or LP gas), compressed natural gas (CNG), hydrogen fuel cells or biofuels. Nonetheless,
the most popular and available drives are currently CNG, used in private passenger
transport, and LPG used mainly in the cargo or load transportation and electric
transportation which is in many cases more popular when combined with fuel, and thus
called hybrid transportation .However, the European Union is so far determining the
obligation for member countries to develop the transport infrastructure (number of filling or
charging stations) for electro mobility, natural gas and partially also for the hydrogen fuel
cells (NAP 41).
3.3.1
Natural gas cars
Usage of natural gas is another alternative ecological way to decrease carbon emissions.
According to Bruce McDowell, Director Policy Analysis, of American Gas Association,
“Natural gas is the cleanest fossil fuel that is highly efficient form of energy”. Moreover its
great benefit is its long time accessibility; the world’s bearings of natural gas is supposed to
be leveraged 50 to 100 years after the gas reserves (NAPCM 39). In the vehicle, natural gas
is stored in tanks as CNG or LPG. The former is mainly used for personal transportation
and LPG for cargo and heavy load transportation. On the base of data from the website run
by Czech state organization, called Czech Gas Association, www.cng4you, natural gas
surprisingly powers around 19 872 932 vehicles worldwide. To compare the share of
registered CNG cars in the world and in order to show its increasing popularity, we can
refer data from the years 2009-2013 (below). As it is seen in Figure number 2, within four
years the ratio almost doubled. The table provides evidence to the increasing popularity of
17
CNG transportation in the world, which is predicted to increase even more within the next
few years as a result of favorable policies and developed net of CNG filling fuel stations.
Figure number 3 showing the share of CNG cars in the world
(Source: cng4you.cz)
The share of CNG cars in Europe is 1,85 million, out of which 746 000 of CNG cars are
registered in Italy, currently the European leader for CNG fuel transportation (cng4you.cz).
18
Graph number 3, showing the share of CNG cars in the Europe
(cng4you.cz)
The Natural & Bio Gas Vehicle Association predicts a 5% share of CNG cars on the
European market in the year 2025 and 9% share in the year 2040. It is considered as a
slower development in comparison with the global market that is predicted to have 9%
share (which is 65 million of CNG cars) already in the year 2020 (NAPCM 41). On the
figure number 4 below is shown predicted trend of CNG transportation in the world.
(NAPCM 42).
19
Figure number 4, Predicted popularity of CNG in the world
(Source: Extracted from, NAPCM 41, translated by Nikol Medunová )
The increasing popularity of CNG transportation can be also evidenced by the growing
number of CNG filling stations; there are already 4 570 CNG filling stations in Europe, out
of which 3000 CNG filling stations are in the European Union (cng4you.cz). As it is seen
in on the graph number 5 below, the greatest concentration of CNG filling stations are in
Italy and Germany. They concurrently show the evolution of the share of CNG cars in
Europe, and the holding of gas filling stations.
20
Graph number 5, showing the amount of CNG filling stations in the Europe
(Source: NGVA)
On the base on the International Gas Union, in comparison with fuel, natural gas has
around 25 to 30% lower emission of CO2. It is also more ecological friendly, mainly for
the reason that natural gas produces less carbon dioxide (greenhouse gas), sulfur dioxide
(acid rain), and nitrogen oxides (smog). CNG is used in regular petrol combustion engine
cars that have been transformed for this source of energy, so those cars after such a
transformation are something like hybrids that can be powered either by regular petrol or
by CNG. The other alternative is automobiles that have been already manufactured with the
purpose of CNG fueling. LPG, like CNG, does not contribute to photochemical smog,
which is responsible for the high concentration pollution in the cities.
The European Union acknowledges natural gas transportation as a more ecological
alternative way of transportation, and thus supports it. The European Parliament and the
Council adopted on 29 September 2014 a directive on the deployment of alternative fuels
infrastructure, which requires member states to develop national policy frameworks
21
(“Regulatory implications of new developments in the gas supply chain”
9). Each
European member state should define the national targets for the market development of
particular alternative fuel and their infrastructure. The policy frameworks shall be
submitted to the European Council by the end of 2016, and has to contain concrete plans of
the filling stations for gas. Such as, for instance, the specific amount of filling stations for
CNG and LPG, as well as the average distance of each filling station. In the case of CNG, it
is 150 km and in the case of LPG it is 400km on the main European communications
(Denková). After that, countries must every three years submit to the European
Commission the report containing domestic transportation policies, including incentives
supporting the transportation based on alternative fuel, parking benefits, and tax benefits.
The European Commission does its best to create beneficial conditions for natural gas
users. Thus the Energy Tax Directive currently in force (Directive 2003/96/EC
restructuring the Community framework for the taxation of energy products and electricity)
foresees favorable taxation levels for natural gas (“Regulatory implications of new
developments in the gas supply chain” 11).
3.3.2
Electric cars
Brad Berman in the site “Plugincars” explains that electric vehicles are powered by an
electric motor instead of a gasoline engine (“What Is an Electric Car?”). The key important
component that powers the electric motor comes from rechargeable batteries, such as leadacid batteries, nickel cadmium batteries, nickel-metal hydride batteries or lithium ion
22
batteries. As professor Cholakov from the University of Chemical Technology and
Metallurgy in Sofia states, it is the very ecological way of transportation since the amount
of launched emission is zero (3). Thus in the long term, electric vehicles are important to
countries seeking to decarbonize the transport. The International Energy Agency made an
interesting study showing the important role of transport CO2 reduction number shows a
situation in which three-fourths of all vehicle sales by 2050 would be the electric vehicles,
resulting in the overall CO2 to be reduced by 21 %, and the average global temperature
increase would be limited by 2°C (Trigg & Telleen 7).
Figure number 6, showing the Role of Transport in CO2 Reduction (% = 2050 estimate)
Source: (Trigg & Telleen 7)
However, although this means of transportation appears to be very ecological, there are still
many imperfections that need to be improved in order to meet a greater demand and a
following complete transformation from current fuel car trends to electric cars. The greatest
disadvantage of electric cars is its high price, which is driven by the price of its crucial
component, which is its battery. Another problem that electric cars still have is the short
23
range in comparison with the fuel and also natural gas cars. Although it varies from model
to model, the average range of electric cars is still around 150 km (NAPCM 25). In this
case, there is a need for either fast charging in order to continue a long journey, or a longerlasting slow charging, which is mainly done during the longer immobility of the car.
Fast charging provides a direct current of electricity to the vehicle’s battery from an
external charger. Charging time is thus very quick and takes 0,5 hours to two hours for a
full charge (Trigg & Telleen 14). On the other hand, slow charging is currently the most
common type of charging; provides alternating current to the vehicle’s battery from an
external charger. Charging can take from four hours to twelve hours for a full charge
(Trigg, & Telleen 14). The last and unfortunately most compelling problem is the
development of the net of charging power stations. With either fast charging with a great
inflow of electric energy or slow charging stations at such places as shopping centers,
offices or residences.
On the contrary, among the advantages can be considered for instance electric car’s total
independence on petroleum. As well as the usage of electricity that is often domestic and
comparably inexpensive (especially in those countries that have fully developed the
alternative resources of energy). Moreover its quietness that is also a great benefit.
It is interesting that, despite of the fact that the first electric vehicle appeared on the market
already in the 1881 the world is realizing its importance and supporting its research only
the last 10 years. Among the reasons why it is so could be for instance the significant
instability of oil prices, air pollution and smog that is often present in the bigger cities with
high transportation or also the climate change. Anyhow, the amount of capital invested for
24
additional research and development connected with the electric cars is greater ever before.
The evidence might be for instance the prices of battery cost that are thanks to innovations
falling down. Such can be seen on the comparison of battery prices in the year 2008 where
the price was USD 1000 per kilowatt hour (kWh) and the year 2012 in which price felled to
USD 485 per kWh. Figure 16 shows the prediction of battery cost in the year 2020. It
considers the compound annual growth of learning rate, which describes the reduction in
cost of batteries through economies of scale. Even thou the prices are for most of people
currently still high and additional research and development is still needed (Trigg &
Telleen 17).
Figure number 7, estimated cost of Electric Vehicles Batteries through 2020
(Source: Trigg & Telleen 17)
Without regard to the high pricing, the amount of electric car owners is rapidly increasing.
At the beginning of the year 2012 there were just about 100 000 electric cars driving
around the world. The following year there was two times increase to 200 000 and at the
25
beginning of 2014 it made even 450 000 electric cars (“The amount of electric vehicles has
doubled since the last year. The amount of electric cars in the world is already 405
thousand”). The most considerable demand is certainly in the United States that has
developed programs for the support of sale of these cars as well as the innovative products
and business models such as wireless charging, car sharing, and workplace charging (Trigg
& Telleen 15). The greatest concentration of electric cars worldwide is in the United States
making 174 000 cars, in the Japan where there is 68 000 electric cars and in China having
45 000 cars (“The amount of electric vehicles has doubled since the last year. It is already
405 thousand”). In the Europe, the leader country is Norway and the Netherlands.
Despite of the imperfections that electric cars still have, there are some ways how to
increase the sale of them and how to support people in their purchases. As a great example
might be already mentioned Netherland’s electrification which main incentives came from
the government through for example favorable taxation, parking benevolence or free
charging.
There are many opportunities in electric mobility field, since it is still considered as an
innovation. Electric vehicles have a great potential, however to make them compete with
fuel cars, they is to develop battery with high specific energy, high power, long-life and
low-cost .Hence, there is a great opportunity beyond batteries to diversify the research and
development scope for decreasing the total price of electric cars. Some companies are
aware of that. For instance Siemens claims that “Environmentally friendly and efficient
mobility is one of the greatest tasks of the future”.
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3.3.3
Fuel cell cars
Fuel cells mobility is so far in its early beginning and thus its development rely on
additional research and development. Fuel cell vehicle is a vehicle in which fuel cells are
powering the electric engine through an electrochemical energy conversion device that
converts the chemical energy of a fuel directly into electricity and heat. As John Wiley
from the Institute of Physical Chemistry of Bonn University writes in the Handbook of Fuel
Cells, “The process is similar to the combustion process, which occurs in an internal
combustion engine but in a fuel cell this takes place at high energy conversion efficiency
and negligible harmful emissions”(1). For these reasons, fuel cells are expected to play an
important role in the replacement of the internal combustion engine in the near future. For
better understanding of the way, fuel cell system functions, it can be compared to a battery.
It has an electrolyte, negative and positive electrodes and it generates direct current
electricity by electrochemical reactions. However, unlike a battery, which is essentially an
energy storage device, a fuel cell supplies power as long as there is a supply of fuel and
oxidant.
There are several types of fuel cell vehicles like direct-drive and hybrid drive cars fueled by
pure hydrogen, methanol and hydrocarbons (gasoline, naphtha) (Beuthe 339). Fuel cells
vehicles powered by liquid fuels have on one hand benefits in terms of fuel shortage and
infrastructure but on the other hand they need on-board fuel reformers (fuel processors),
that result in lower car efficiency (30-50% loss), longer start-up time, slower response and
higher cost. Because of these drawbacks and fast advancement on direct hydrogen systems,
majority of car manufactures are currently interested in development of pure hydrogen fuel
cell vehicle, that is more efficient and at the same time produce zero emissions. Some of
27
them have already begun leasing and testing in larger quantities. As Mukhtar Bello,
professor from the Department of Chemical Engineering at Ahmadu Bello University in
Zaria writes, “There is encouraging progress on the provision of hydrogen filling stations
with about 208 available stations worldwide as of 2012, which will support the deployment
of fuel cell vehicles” (181).
Hydrogen on its own can be produced largely from fossil fuels. As shown in figure below
6, 48% of hydrogen is produced from natural gas, 30% from refinery or chemical off-gases,
18% from coal, and 4 % from electrolysis.
Figure number 8, Hydrogen Production from Different Sources
(Source: Bello, 184)
Though, fuel cells and hydrogen technology is known to the scientific community for
almost two centuries, in recent years, there has been a renewed interest due to global efforts
28
to develop and use clean and efficient energy conversion technologies for sustainable
development (Bello 182). Such can be seen on the increasing number of companies aiming
investigating additional researches. One of the most desirous hydrogen mobility initiatives
in Europe have joined forces to support the introduction of hydrogen-fueled transport. A
large coalition of European partners has launched the Hydrogen Mobility Europe project
(H2ME). It is the largest European project of this nature and is based around an alliance of
the four most ambitious hydrogen mobility initiatives in Europe: H2 MOBILITY
Deutschland, Mobilité Hydrogène France, Scandinavian Hydrogen Highway Partnership
and UK H2 Mobility (itm-power.com).As the association, Hydrogen Mobility Europe
states, H2ME is co-funded with €32 million from the Fuel Cells and Hydrogen Joint
Undertaking. This project aims to support the distribution of Fuel Cell Electric Vehicles
(FCEVs) and hydrogen refueling Stations across Europe (“The most ambitious hydrogen
mobility initiatives in Europe have joined forces to support the introduction of hydrogenfueled transport”). Another additional researches done with the purpose to find the way
how to produce hydrogen from renewable energy in recent years brought the idea of using
wind, solar and biomass resources. Biomass gasification process, which is similar to that
used for producing hydrogen from coal, is currently the main focus for producing hydrogen
or hydrogen-rich syngas for fuel cells application. Thus, a biomass-to-fuel cell system
offers a renewable source of low emission electricity and heat with flexible feedstock
options.
29
4. The Czech Republic
4.1 Description of the Czech Republic
Czech Republic is a landlocked country bordering with Germany, Poland, Austria and
Slovakia. It has part of the European Union since the year 2004, but is still not part of
Fiscal Union, meaning that the local currency is still the Czech Crown. As Ivana Jenerálová
from the Czech Ministry of Foreign Affairs states, “The main pillars of the Czech industry
are engineering and machine engineering, mining, chemistry and foodstuff production,
followed by the energy industry, civil engineering and consumer industry” (1). One of the
dominant industry that has key importance for the Czech Republic is automotive industry,
making an income of 991 billion Czech Crowns, which makes 7,4% of the gross domestic
product and 23,4% of overall Czech exports, employing 155 500 workers (Jenerálová :
Pecák).
4.1.1
Economy
Czech economy currently performs very well and it i’s said to be the highest growing
economy in the Europe (“Česká ekonomika má našlápnuto, roste nejrychleji v Evropě”
Czech economy is almost the fastest growing economy in the Europe). This might be cause
of the radical decision of the Czech National Bank, central bank that who decided in the
2013 to increase export and employment by deflating the Czech Crown. This caused
inflation to increase from 0.2% in November 2013, to 1.3% in the first quarter in 2014
(Fojtík). By in the end of the year 2014, GDP in the Czech Republic increased by 2% as it
can be seen on the graph number 9. This year, in 2015, Czech Republic's economy grew by
4, 2% and thus became the fastest growing economy in the European Union (“Česká
ekonomika má našlápnuto, roste nejrychleji v Evropě”). On 29 May 2015, it was
30
announced that the growth of the Czech economy has increased from calculated 3, 9% to 4,
2%. In 2014, the Czech GDP per capita at purchasing power parity was $29,925, and
$19,563 at nominal value (IMF). Czech unemployment is with at its 6, 2%, the second
lowest in the EU. Current inflation is 0, 5% (Reuters). As a result of the wellbeing of the
Czech economy, the average salaries as it can be seen on the graph number 10 below
increased to 26 287 CZK/Month in the second quarter of 2015 from 25 306 CZK/Month in
the first quarter of 2015.
Graph number 9, GDP of the Czech Republic from the year 2011 until the year 2015
2013
I.
II.
(Source:
. III. Noviny.cz)
VI. I.
II.
III.
III.
2014
IV.
I.
II.
III.
2015
IV.
I.
II.
31
Graph number 10, average monthly wages in the Czech Republic
Jan. 2013
Jul.2013
Jan.2014
Jul.2014
Jan.2015
Jul.2015
(Source: Czech Statistical Office)
4.1.2
Political System
The Czech Republic is a parliamentary democracy. Power is divided into a legislative
branch represented by Czech Parliament, executive brand represented by Czech
Government, and the President of the Republic and judicial power represented by the
courts. Each of the powers are independent of one another.
4.1.3
Legislative process
Authors note: the following section is translated from Ústavní parvo a státověda II. Díl
Ústavní Právo České Republiky. No sources on Czech legislature in the English language
were suitable and/or relevant.
32
Legal rules come into force on the day of their publication and into effect on the 15th day
after its publication in the Collection of Laws. Although, there is a long journey before that
which is divided into the legislative process on the government level and the legislative
process on the Parliament level.
In the Legislative process on the governmental level, legal rules are formulated by
ministers or other central bodies of the state administration. Its advisory body are the
Government Legislative Council and its commission have a 60-day (which is possible to
extend by another 20 days) time limit for giving its opinion starting from the day of
submission. After the comments procedure, materials are presented to the governmental
meeting. Those that require a discussion or ones with disagreements are debated. There is
then a vote following the debate. The standpoint of the Government Legislative Council is
taken into consideration. Draft general principles of laws, bills and government orders are
submitted to the government meeting. In the case of an approval of a draft general principle
of law, the decision is published on websites of the Office of the Government, which can be
found at: www.vlada.cz.
A government bill in the printed form is dispatched by the Prime Minister to the
Chairperson of the Chamber of Deputies. The Chairperson of the Chamber of Deputies
passes the text of the government bill to the Steering Committee of the Chamber of
Deputies, to all deputies and political groups. The debate on a government bill is held in the
framework of three readings. In case the bill is adopted by the Chamber of Deputies, it is
passed to the Senate.
33
After the approval of a law by the Senate, the Chairperson of the Chamber of Deputies
forwards every act of law to the President of the republic. If any passed act of law is
returner to the Chamber of Deputies by the President of the republic within 15 days
following its receipt, the Chairperson of the Chamber of Deputies presents such returned
act of law to the Chamber of Deputies. If voted for by majority of all deputies, the act of
law is published in the Collection of Laws. Otherwise, the act of law is regarded as
rejected.
4.1.4
Analysis of oil prices and excise tax
Fuel prices have been continually increasing in the Czech Republic. For the purpose of
comparison, prices of diesel, gasoline and CNG were recorded during five years (from the
years 2008-2014). As it can be seen on Figure 11a and 11b below, prices of both of
commodities have been fluently increasing. In the case of gasoline, price went up by
27,874% and in the case of diesel even by 46,237%, whereas prices of CNG experienced
only a very small increase (Czech Statistical Office). Furthermore, an additional increase of
all three fuels is expected. However, the price of CNG should not experience any high
increase until the year 2020, as a result of the agreement with the EU. As Deputy Minister
of Industry and Trade, Eduard Muřický said, the evolution of CNG price after the year
2020 will depend on the strategy of Ministry of Finance (Denková). Muřický also claims
that on one hand, consistently raising the amount of CNG users will lead to greater outage
of the state budget, but on the other hand the Ministry of Finance should have in mind that
the rapid increase of imposed consumption tax could result in destroying the whole concept
34
of subvention of more ecological, alternative fuel (Denková). The state of Slovakia
provides an example, as they imposed too high of a consumption tax for CNG which led to
complete slowdown of transformation towards more ecological, CNG transportation
(Denková). It can be said that the future of CNG transportation partly depends on the
Ministry of Finance.
Figure number 11a &11b the development of CNG, Petroleum and Diesel prices from the
year 2008 to 2014.
Figure 11 a
CNG(kc/m³)
2008
2009
2010
2011
15,9
15,75 16,46 16,7
2012
2013
2014
16,95 17,19 18,1
Petroleum(kc/l) 28,27 31,53 31,74 31,57 33,65 36,21 36,5
Diesel (kc/l)
24,72 26,67 30,57 34,25 36,53 35,92 36,15
35
Figure number 11 b (Source: Czech Statistical Office)
Development of fuel prices in the Czech
Republic
4.2 Mobility in the Czech Republic
4.2.1
Description of mobility in the Czech Republic
The amount of car owners in the Czech Republic has for the last 20 years been continually
increasing as it can be observed on the graph number 10. For instance, there were only 2,4
million registered cars in the 1990, whereas in the year 2000 there were 3,4 million cars,
and one year later, more than 4,5 million cars (NAP 18). The number of registered cars
until the September 30 2015 accounts for 7 069 206. Records show that on December 2014,
there were more than 22% cars older than 20 years, and at the same time responsible for
36% of dangerous gases damaging the air (Car Importers Association). On graph number
11 below can be observed the more contemporary, accurate measurement that was done in
September 2015. It shows that 45.29% of the cars in the Czech Republic are older than 15
36
years (Car Importers Association). The average age of cars in European Union is in contrast
7,5 years (NAP 18).
Graph number 12, Amount of registered cars in the Czech Republic
(Source: Czech Statistical Office)
37
Graph number 13, total amount of fuel engine cars in the Czech Republic
(Source : Car Importers Association (SDA) )
4.2.2
Green Mobility
Green mobility in the Czech Republic is so far not supported by any incentives or laws.
Nevertheless, according to the EU directive 2014/94 EU, the Czech Republic is forced to
employ a law supporting the introduction of infrastructure for alternative fuel transportation
(NAPCM 10). The name of the draft that supposed to be presented to the government is
called “Národní Akční Plán Čistá Mobilita” (National Active Plan Clean Mobility)
Companies or people that have been supporting clean mobility are doing it so far for
predominantly altruistic reasons, with very little benefits. However, the share of clean
mobility vehicles in the Czech Republic amounts to 12 000 CNG and 180 000 LPG, 1 500
38
hybrids and 300 electric mobiles, which are not insignificant (NAP 18). Thus, it can be said
that natural gas has been facing the greatest popularity among all clean mobility
possibilities in the Czech Republic. Amongst the reasons might be its favorable price or its
possibility of being used simultaneously with petrol.
The Czech state supports green mobility and set an example to its inhabitants by its own
transformation in public administration transportation. On 16th of December 2008, a
program for public administration cars diversification was approved, based on Resolution
1592 (NAPCM 28).The goal was to have 25% of government administrative vehicles to be
ecological cars by 2014. However, when was this period came to being, there were only 13
electric cars and two CNG cars purchased, leaving the goal far from being reached (NAP
19).
4.2.3
“Národní akční plán čistá mobilita” (NAPCM)
The aim of NAPCM is, to give positive encouragement of the use of alternative kinds of
fuels with the purpose of reaching better quality of the air, limiting emissions as well as the
pollutants and greenhouse gases rising from the transportation. As it is seen on Figure 12,
the key importance of this project is to support and develop the electric, hybrid and natural
gas transportation in the Czech Republic within the years 2015 and 2020. It can be
observed that the emphasis placed on the pilot projects takes significant a part in the
development.
39
Figure number 14, the main concern of NAPCM
(Source: Extracted from NAPCM 20, translated by Nikol Medunová)
To meet the requirements of the EU, the Czech Republic had set up a team for the creation
and formulation of a new law supporting green mobility. The law-making group has
consisted of the representatives of ministries (namely Ministry of Industry and Commerce,
Ministry of Transport, Ministry of Environment, and Ministry of Local Environment),
academics, gas companies, and investors filling the CNG stations and manufacturers of car
for a CNG drive. Turns out, the creators of the bill are connected with natural gas industry
either gas companies, gas investors or car producers, which gives reason to suspect some
form of foul play. It is conspiracy whether the conflict of interest is present here or not.
The final draft of NAPCM is supposed to be presented to the government in June 2015.
This still is yet to be done. Even if the second term for presentation were done on time
(which is in the middle of November), the predicted time of legalization would not be
earlier than in May 2016. The Czech legal system is very complex and time consuming due
40
to its bureaucracy. The debates following the first, second and the third readings are
sometimes time consuming given that the discussions are due to some enormously long
communicative elements in the government. It needs to be remembered that after the
government round, the NAPCM would move to the parliamentary round, and only then to
the president’s hands for approval. In each case some disagreement can occur which means
that the bill would automatically go back to government for another debate and
improvement.
4.2.4
Electric mobility in the Czech Republic
The development of electric mobility in the Czech Republic still lives in its early
beginnings. Among the reasons for it might be first of all the absence of any legislative
support so far. Secondly, there are no considerable advantages for clean mobility users,
such as parking benefits, state subsidies etc. like in other west European countries. Thirdly,
the generally high price of electric cars, especially when taking into consideration the
average income in the Czech Republic which is around 25 306 CZK/Month. As well as
very expensive price of the battery, that is the main spare part. Another issue that slows
down the deployment of electric cars on the Czech market might be the limited offer from
the side of car dealers. Such a drawback is justifiable by the fact that the Czech market is
not so attractive for the main competitors since there is, in comparison with other states, a
very low demand. The overall low demand for electric vehicles in the Czech Republic has
something to do with the still-not-fully-developed infrastructure of power charging stations.
Currently, there are about 300 power stations in the Czech Republic, out of which 15 of
them are so called fast charging stations (elektromobilita.cz). On the figure number 15 can
be seen all the power stations.
41
Figure number 15, current net of electric power stations
(Source: elektromobily.org)
Until now, there have been two major competitors contributing to the establishment and the
development of charging stations in Czech Republic. Those are CEZ (České Energetické
Závody), Czech Energy Competition , which is the major energy company in the country,
providing around 44 power stations, and PRE (Pražská energetika), Prague Energy
arranging over 32 power easels. Among the other rivals can be also mentioned RWE,
Rheinisch-Westfalische elektrizitatswerke or E.ON (operating so far just four power
stations). All of these companies are willing to invest into the better power charging
infrastructure. Moreover, all of these companies are running their own pilot programs,
enabling them direct experiences of e-mobility in the Czech Republic. The goal of these
projects is to become more familiar with all the needs and insufficiencies connected with
the e-mobility. At the same time, such pilot projects enable potential customers of electric
42
cars to buy experience on their own the e-mobility whilst the industry goes into further
development. See APPENDIX for additional photos.
Building power charging stations is meanwhile very costly. The estimated expenditures for
covering a single power charging station by electric feed is between 750 000 CZK and 1
500 000 CZK (NAPCM 32). The costs of building new charging infrastructure are driven
by a number of factors containing ground works, grid connection fees and so on.
Nevertheless, there are not yet any state subsidies or tax benefits encouraging companies in
constructing the infrastructure. Controversy, the contemporary legal situation and high
bureaucracy is more reason for its drawback, making things even more complicated. The
building up of a power charging station in CEZ acts as an example for such deterrents.
Tomas Chmelik, CEZ manager for a clean mobility, notes that it took CEZ two years to
organize all permits to start building one small power charging stations in front of the CEZ
company grounds (Smrčka). This should change in the case that the government passes the
NAPCM bill, which includes support for the development of power charging stations.
Another issue that needs to be taken into account when thinking about the development of
power charging infrastructure is the location and its terrain. When estimating the price of
power charging stations, technology and functionality should also be considered; such is
the type of charging station (ultra-fast, normal, home charging). Also to be taken into
account is the service and maintenance, containing visualization such as parking
navigation, signs) and customer relations (help lines, web pages). According to the EU
directive 2014/94 EU, there should be around 13 000 power charging stations established
before the year 2020 (eur-lex.europa.eu). For its power stations, the Czech Republic has
already applied and is going to support standardization of AC (alternating current) power
43
charging infrastructure (Kott 22). This means that all of the charging stations are and are
going to be equipped with a unified specialized outlet for four kinds of electro mobile cars
according to the standard IEC 62 196-2 and IEC 61851-mode 3. This type of power
charging station provides fast charging with the output of 22kW. A full charge with this
power would approximately take around one hour (See photo 4 in APPENDIX).
Nevertheless, the majority approach of Czechs towards electro mobility is so far negative.
This is connected with the still prevailing distrust and prejudice of Czechs, whose
experience with electric mobility is thus far still very. To evidence this information with
primary research, a personal interview was conducted with Vasek Fojtik, the director of
Auto Jarov, the biggest car-selling company in Prague. He claims that the success of
electric cars in the Czech Republic is reliant on the advancement of electric batteries, since
their price is still too expensive for the majority of customers (Interview with Fojtik 2015)
(See interview questions in APPENDIX). Fojtik gave evidence to this fact by the amount of
electric cars sold in the year 2015. Since January, only 35 electric cars have been sold, out
of which 13 were sold to PRE and CEZ for their pilot programs. It is important to mention
that Auto Jarov also sells second hand cars, however, as Fojtik said, Auto Jarov will likely
soon cease to continue in their sale. He claims that the prospect of selling used electric cars,
which is key for car dealers in the Czech Republic, is decreased due to the depreciated
value of the car and the depreciation of the main electric car component: the battery. For
these reasons, mediation of a greater amount of electric cars supply is not advantageous for
car sellers such as Fojtik and many others.
To define the size of the electric car market in the Czech Republic, refer to the table
number 16 below, which illustrates the key factors influencing demand for electric cars.
44
Table number 16 showing the key factors influencing demand for electric cars
Customers’ needs
Key factors
Description of key factors
Mile range
Current mile range on one charge is close to 150 km
which is the reason for limited use of a pure electric
cars.
Mileage disadvantages are not expected in PHEV in
compare to combustion engine.
Unlimited
mobility
Requirement of flexibility (always reach the
destination)
It is expected that the pure electric car will be one of
two cars in the household, PHEV only
Developed
infrastructure
The use of electric vehicles is influenced by the wide
availability of safe and convenient infrastructure.
Market factors
The key factors which will affect the attractiveness of
electric vehicles will be, expected decline in prices of
batteries and the development of fuel prices
Regulatory
Environment
The attractiveness of electric vehicles may
significantly increase the monetary and non-monetary
incentives
Offered vehicles
(segments,
brands)
Availability of various brands across segments is
necessary for meeting users' needs for comfort, size,
performance, and meets the needs of image
Needs of mobility
Expenditure needs
(TCO)
Desired image
(Source: Analysis Roland Berger, Extracted from NAPCM, p.25, Translated by Nikol
Medunová)
As it is seen shown on the figure above, among the key factors influencing the purchase of
the car are its range belongs the range of the car, flexibility, developed infrastructure,
market factors, electric cars supply (brand segments). From the point of view of Vasek
Fojtik, the current situation on the Czech market is expected to start changing as soon as the
price of electric batteries decreases.
45
Conversely, there are entrepreneurs that sees a great opportunity in the electrification of
mobility and believe that electric vehicles will be the fast, successor to cars will take over
within a decade. One of them is Petr Žaluda, CEO and director of Olife Company which is
producing car batteries (See interview questions in APPENDIX). As Žaluda explained in an
interview with him, Olife batteries are the first real substitute for Lead-Acid Batteries and
consist of non- toxic materials such are as aluminum, copper, nickel, plastics, and organic
compounds are used, such as electrolytes in the Lithium cells and the super-capacitors
(Interview with Žaluda, 2015). Although, Olife has been on the market since 2013, it has
already patented its unique technology in the EU, United States, and in Russia. Olife
Company is the first company in the Czech Republic that applied for the grant offered by
Horizon 2020 and succeeded (with the grant of KC 100 000 000) (Záruba). Žaluda
commented on his success by saying:
“The key success of our company is our trust in more ecologically friendly environment
that can eliminate from its system harmful pollutants caused by cars the mobility, factories
and power stations. Our aim is to provide people a chance of living more environmentally
friendly life.” (Interview with Žaluda 2015).
Olife Company wants to come in the near future to the market with the house storage
batteries. The purpose of those these batteries would be to store energy from solar panels in
the households and companies. The dream of Olife Company is to create components for
fully (energy) independent households, which would not be dependent on the most
expensive and environmentally harmful elements, such are coal energy and petrol. So far
has been Olife Company working on its innovation, testing and patent issues in Czech
Republic. For this reason their business strategy is yet still business to business. However,
46
on the base of Žaluda has suggested that, such this is going to change in the near future
(Interview with Žaluda 2015).
One of the most valuable and world known competitors for Žaluda is Elon Musk, inventor
and owner of Tesla Motors. Tesla became famous mainly for its production of luxury
electric cars. Both Žaluda and Musk advocate similar views and the ideology of a 100%
ecologically friendly environment. At the beginning of May 2015, Musk introduced to the
world his new invention, shortage batteries for households. The popularity of the shortage
batteries is thanks to their unique and fashionable design, which are applicable to any
interior. However, main difference between CEO of Tesla motors and CEO of Olife
Company is the disposable capital that they have for running their projects and based on
previous expensive research, as well as the fact that Musk has already a world-renowned
reputation thanks to his highly popular Tesla car models. Furthermore, as an American
Company, Tesla has better access to the larger and more profitable American market. On
the other hand, European Žaluda is likely to have the support of European customers. In
fact, Olife has already great expectation for this as it was able to get the subsidy from the
European Union fund, Horizon 2020. Žaluda also managed to patent his company in the
United States and China, which suggests the expectations of wider demand in the future.
The Ministry of industry and Trade, developed with the cooperation with renowned Czech
Business Management Consult Roland Berger, developed a table assuming the scenario of
electric mobility in near future.
47
Table number 17 showing the prediction of electro mobility in the future
Factor
Definitions for purposes of projection
Range and
limitations
mobility
It is expected that a vehicle with the electric drive will be one of the
two cars in the household due to a limited mile range per charge
o
o
It is assumed that real mile range will be 150 km/per charge in a year
2020
It is assumed that real mile range will be 200 km/per charge in a year
2025
In the case of PHEV is expected theoretical unlimited range, i.e. It
can be used as the primary family car
The development and research may be affected by the extending
mile range which may result in increase of battery capacity (e.g. it
may double), however, this factor exacerbates TCO analysis and
puts an emphasis on improving performance of quick charging
technology (keeping length quick charging within acceptable limits)
with implications for topology and demands for connectivity in
building a network of charging stations.
Covered infrastructure
 It is expected that the rechargeable infrastructure will be developed
in phases.
o
o
Important cities and routs should be covered by the year of 2020
(cities with more than 100 000 residents, all regional cities and
highways routes = 27 % of the population).
All cities with more than 10 000 residents will be covered by the year
of 2025 (131 cities, higher concentration in big cities = 52 % of the
population).
 Emphasis on fast and ultrafast public charging.
The price of gasoline
 According to the new IEA policy, there is expected 1% increase in
the gasoline prices every year until 2020. Main reason for this
change is the price of oil according to the scenario presented by
the new IEA policy (change in VAT are not expected as well as
change in sale margin, distribution cost etc.)
The prices of electricity
 It is expected only slight growth in electricity prices by 2020
(2,9 % annually).
The
prices
 There is an expectation of decrease of battery prices due to an
achieved technological advancement in the field, the expected
decrease is about 7% per year, and this prediction does not
account for revolutionary discovery in this field. (for example brand
the technology of batteries)
battery/vehicle
 Smaller capacity battery is expected for PHEV, but with higher unit
cost as a result of the technology use (higher material demands).
48
Factor
Fee for electro mobility
Definitions for purposes of projection
 As a fee for electro mobility should be understood the fee for the
access to public charging infrastructure (particularly for quick
charging stations)
 The fee is designed to cover the value of expenses connected with
the charging, but not with the expenses for the electricity itself (i.e.
the user pays for charging outside his or hers home, and faster that
home)
Maintenance costs
o
o
In electric car the expected fee is around 500 CZK/per month
The fee is not expected in PHEV (it is assumed that the PHEV will be
recharged at home)

Prediction assumes the lover maintenance cost for electric
vehicles
o

approximately 8 200 CZK/per year in comparison with
the ICE B segment of around 11 800 CZK/per year
Higher maintenance cost is expected in case of PHEV
(combined technologies)
o
17 300 CZK/per year in compare with the ICE D segment 16
500 CZK/per year
Consumption

Stable consumption is expected in vehicles with combustion
engine as well as with electric engine (eventual reduction in
consumption is offset by the higher cost of acquisition /
maintenance in combustion engines, with electric vehicles is
due to the high efficiency of electric drive with further increases
in count)
Offered Models

The model range significantly expanded in recent years – all
main segments are covered already. Another expansion in the
model range is expected in upcoming years.
(Source: Analýza Roland-Berger, Extracted from NAPCM, p.27, translated by Nikol
Medunová)
As it is seen in the above, it is expected that because for the reason of the low range that
electric cars currently so far have, will be electric cars used as the second car in the
household. It is anticipated that the average range of electric cars will increase by 50 km
until by the year 2025 (NAPCM 27). In the case of hybrids so called PHEV is the range
unlimited, since there is the possibility of switching to petrol. The table also shows that the
49
more important cities (with the population over 100 000) will be covered by power
charging infrastructure until the year 2020. Cities with the population above 10 000 people
are supposed to be covered by the year 2025. There is expected only small increase of
electricity price is expected at, making 2, 9 % annually. However, it is assumed that the
average price of gas will increase annually by even less, at 1%. Fortunately, the price of
electric cars batteries is expected to fall by 7% annually thanks to the technological
innovations. The scenario expects hybrids to have greater share of soled cars in comparison
with electric cars.
At the present time there are around 300 electric cars and 1500 hybrids in the Czech
Republic (elektromobilita.cz).
TAZZARI SMART
ZERO
E L E C T R IC
DRIVE
SK OD A
EVC F3
SK OD A
EVC R3
NI SSAN
L EAF
P EUGEOT C I TROEN
I ON
C-ZERO
(Source: internet research done by Nikol Medunová)
TH I NK
CI TY-
BMW I 3
909000
810 000
739 900
717288
715300
705 000
640 000
610000
525 000
Electric cars available on the Czech market
900000
Graph number 17, showing current supply of the electric cars on the Czech market
TOYOTA
PRIUS
P L U G - IN
H YBRI D
50
4.2.5
Natural Gas mobility in the Czech Republic
In contrast with currently unpopular electric mobility, the natural gas fuel transportation is
experiencing its boom in both cases of CNG and LPG. The reasons for are primarily as a
result of the bill “Narodni akcni plan cista mobilita” bill, oriented on natural gas
transportation.
4.2.5.1 CNG mobility
Compressed natural gas is widely popular in the Czech Republic. Its usage in transportation
has been conducted here since the year 1895, so it can be said that Czechs have relatively a
lot of experiences with its operation (cng4you.cz). CNG has become a fully-fledged and
accessible alternative to oil-based fuels and is currently the most promising alternative
motor fuel in environmental, economic and safety terms in the Czech Republic
(czechinvest.cz). Presently, about 12 000 CNG cars out of which 2000 were registered just
within the first half 2015. Car producers and gas companies see many opportunities in this
developing sector, since the pricing policy of CNG is still very favorable. For instance,
Škoda Auto predicts that in the year 2016 there will be 10 % out of all Škoda Octavia
models using CNG fuel. This could be also seen on table 18a showing the comparison of
number of CNG cars between 2004 and 2014 as well as the demand for CNG gas and the
amount of filling stations. For a more accurate depiction refer to graph 18b (below).
51
Graph number 18a, the comparison of CNG cars, fuel stations and sale of CNG
Graph number 18 b, CNG sales in the Czech Republic
2014
(Source of both table and graph: cng4you.cz)
52
The Czech Republic has supported the startup of CNG through proposing the abolishment
of excise taxes for CNG from the year 2007 until the year 2011 (cng4you.cz). The excise
tax was introduced in the year 2012 with its tariff at 500 CZK /t .Moreover, the excise tax
should only increase until the year 2020, as it is seen on the graph below number 19
maximum stated price by EU, 3 355 CZK. As it was mentioned, whether the price excise
tax of CNG will be increased even after the year 2020 will mainly depend on the strategy of
Ministry of Finance. Though it should have in mind that the favorable price of the CNG is
one of the key popularity factor among Czech users. When considering the current average
prices of CNG in the Czech Republic, the cost per 1km is at present around 26 CZK/Kg
(containing GDP) that is 18,50 CZK/m3 (NAPCM 34). In another words, CNG user can
reach 1km distance for the price 1 CZK. When considering the economy in the Czech
Republic as well as the relatively low average salary, CNG has a great potential, especially
when taking into account its ready availability. Contrarily, Slovakia provides a
“catastrophic example” in which the use of CNG cars are discouraged because of the high
prices set by their government in regards to the exercise tax, effectively shutting down the
future of this form of mobility (Denková).
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Graph number 19 showing the development of excise tax for CNG between the years 2006
and 2021
Development of excise tax for CNG 2006-2021
(Source: cng4you.cz)
The infrastructure for CNG is growing very quickly, because competitors see a big
potential and are strongly motivated by the predicted increasing users of CNG. At the
present time there are 95 CNG filling stations (NAPCM 44). Among the main gas company
competitors are E.ON, Vítkovice, RWE, Bonett, Pražská Plynárenská, Vemex, who is the
main construction company for filling stations. Once the NAPCM will be enacted,
competitors can start applying for state subsidies supporting the faster development of
CNG filling station infrastructure. The supply of CNG cars in the Czech Republic, having
more than 60 models, represents a sufficient demand.
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Previously, one of the barriers for potential CNG users was the forbiddance of parking in
garages. However, this restriction has been mitigated by a new order (number 341/2014 Sb)
that allows CNG cars to park in garages if the owner of the garage agrees, and the garage is
in complication with technical standards (Czech Gas Association 2015). The new garages
should already be accessible for CNG cars and should have a 10% parking space
reservation for them. As another benefit, there will be no road tax for CNG cars, which
accounts around the price of 2 500 CZK (depending on the engine capacity).
4.2.5.2 LPG mobility
Although manufacturers usually produce CNG and LPG together, LPG in the Czech
Republic is exclusively a byproduct of crude oil (NAPCM 40). However, the production of
LPG is extremely costly and thus it would be inefficient for a small state like the Czech
Republic to invest such a high amount of money for its production. Furthermore, when
taking into account the increasing demand for CNG, which can easily replace LPG in
automobiles, the need for producing LPG is further diminished. Nevertheless, LPG is
predicted to play a significant role in heavy load transportation. According to EU directive,
the distance between each filling station is to be set at 400km intervals (Denková). For this
reason, the Czech Republic has planned two or three LPG filling stations in the Czech
Republic (Denková). The graphs below number 20 show the predicted amount of LPG
vehicles until the year 2029, as well as the estimated demand for LPG consumption. It can
be observed that the expectations are very positive and that there is a foreseen increase in
LPG transportation.
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Graph number 20, the estimated amount of LPG vehicles in the Czech Republic
Source: ČPS (NAPCM 48)
Graph number 21, Estimated demanded consumption of LNG in the Czech Republic
(mill. m³ per year)
Source: ČPS (NAPCM 49)
4.2.6
Hydrogen /Fuel Cells
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Since the research aiming to invent a more elaborate mechanism of fuel cell cars is still
ongoing in the Czech Republic, the transportation based on fuel cells remains very
limited. There have been many research programs sponsored by the European Union and
the Ministry of Transportation of the Czech Republic; however, the future fuel cell
transportation is still a question to be answered. Nevertheless, there is great interest and
support for this mode of transportation. For example, in the Czech city Neratovice opened
the first Hydrogen filling station in Central Europe, called H2 450-20-20 HB (“Česko má
první „benzinku“ na vodík ve střední Evropě. Je v Neratovicích”. Article title translated:
“Czech has the first fuel station hydrogen in Central Europe”).
5. Application of Porter’s Five Force Model to Czech Car Market
5.1 Definition of Porter’s Five Force Model
Porter’s Five Force Model was created by economist and professor from Harvard
Business School, Michael E. Porter. The framework of this model aims to analyze the
size of competition within an industry and business strategy development. It is built on
industrial organization economics, from which it separates five forces that resolve the
competitive strength and therefore overall attractiveness (overall industry profitability)
of an industry. Figure number 22, illustrates the five forces shaping an industry. Three
of the forces relate to industry (rivalry among existing competitors, threat of new
entrants and threat of substitute products) and the remaining two to the vertical
participants, such as suppliers and consumers (bargaining power of suppliers and
bargaining power of buyers).
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Figure number 22 Porter’s Five Forces
(Source: Nikol Medunová)
Porter’s Five Forces model is a straightforward but solid tool for understanding where
capability lies in a given business situation. As Professor of Management at University
of Bucharest, Ana Maria Grigore suggests, “Although the strength of each force can
vary from industry to industry, the forces, when considered together, determine longterm profitability within the specific industrial sector (Grigore 33)
Porter indicates that while a myriad of factors can affect industry profitability in the
short run – including the weather and the business cycle – industry structure,
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manifested in the competitive forces, sets industry profitability in the medium and long
run (“Five Competitive Forces That Shape Strategy” 2008). The strongest competitive
force or forces determine the profitability of an industry and become the most important
to strategy formulation. On the other hand, the most salient force, however, is not
always obvious.
Industry structure grows out of a set of economic and technical characteristics that
determine the strength of each competitive force (Grigore 33). With the purpose of setting
the potential profitability of new trends in the automotive industry, i.e. green mobility on
the Czech market, Porter’s Five Forces will be used.
5.2 The rivalry among existing competitors
Rivalry among competitors is probably the most important factor that states how
competitive and rivalrous the market is. Porter believes that when the market is
competitive, businesses tend to improve (“Five Competitive Forces That Shape Strategy”
2008). It is so because competition tends to drive prices down as a result of its innovations
and investments that are done in order to succeed. When a market is dominated by a small
number of large companies it is the case of an oligopoly, which on one hand has the greater
ability to exert pressure than smaller companies do, but on the other hand does not give
competitive chances to new entrants.
There is a relatively small number of large companies dominating the green mobility car
market. Among the major companies propagating green mobility are Volkswagen concept
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(containing Škoda), BMW, Toyota, Nissan and Citroen. The top four companies that are in
charge of the overall new car market are Renault, Volkswagen, Hyundai and General
Motors Company, who in combination owns almost 70% of the market (“New Cars in the
Czech Republic” 13). Companies avail themselves of marketing and high level promotion;
as an example, the pilot programs led by CEZ or RWE that aim not just to promote their
energy brand as a proponent of green mobility, but also the brand of a car company
manufacturer. A representative case of a sizable marketing promotion of BMW i3 and i8
models was done in Karlovy Vary, during the town’s most event of the year, the Karlovy
Vary Film Festival. As it can be seen in the photographs below, BMW as one of the major
sponsors of the event, and with the cooperation of CEZ, provided ecological transportation
during the entirety of the festival. It was an expensive, but effective marketing strategy.
Figure number 23, showing BMW marketing campaign at Move Festival Karlovy Vary,
2015
(Source: www.luxuryhouse.cz/bmw-zone-mff-karlovy-vary)
A degree of differentiation reduces rivalry somewhat; there are several different segments
within the market, such as luxury and budget cars (“New Cars in the Czech Republic” 20)
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and an increasing number of mass-market cars have introduced luxury models in order to
increase sales. Conversely, traditional luxury car manufacturers have extended their range
by launching models with lower segments. Because there is should be a stable growth of
new car sales within the next five years, there should not be an enormous change in the
rivalry level. That said, high operating costs and exit barriers in the automotive industry
mean that overall rivalry in this market is strong (“New Cars in the Czech Republic” 20).
5.3 Threat of new entrants
The threat of new entrants section deals with new businesses wanting to enter the market
and thus to become new competitors in a particular industry. A profitable industry will
attract more competitors looking to achieve profits. The Czech new car market is
predicted to perform well and thus can be considered as a profitable industry (“New Cars
in the Czech Republic” 18). The more considerable the threat of new entrants the easier it
is to enter the new market. Alternatively, the lower the threat is, the more difficult it is for
new entrants to penetrate to the market. In the case of the Czech Republic, it is not so
easy for new entrants to enter the market due to the brand loyalty that Skoda commands; a
company that was founded in the Czech Republic in 1895 by Laurin & Klement. Thus,
Czech people have relatively strong patriotic feelings about Skoda (even though it
currently belongs to German Volkswagen). As a result of this, it would be proportionately
difficult to penetrate the new car industry for a brand-new car company, mainly due to the
high fixed costs involved in car design and manufacturing (“New Cars in the Czech
Republic” 18) There are also great foregoing financial expenses relating to potential new
entrants. Those that succeed often do so through the introduction of an established and
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already successful foreign brand. For instance, Tesla with its ecological and specially
designed cars for narrow target customers could succeed in the Czech market (even
though it is an expensive car), because it has a well-known and respected brand and
status.
5.4 Threat of substitutes
As Joan Magretta, senior associate at the Institute for Strategy and Competitiveness at
Harvard Business School explains, “The threat of substitutes arises when companies
within one industry are forced to compete with industries producing substitute products or
services” (Magretta 210). Porter explained it by the “availability of a product that the
consumer can purchase instead of the industry’s product” (“Five Competitive Forces That
Shape Strategy” 2008). Such product is obviously bringing similar advantages. Porter
also believed that the threat of substitutes shapes the competitive structure of an industry.
In the case of green mobility and new car market in the Czech Republic, the threat of
substitutes are second hand cars or used cars, or especially public transportation. However
the threat of larger second hand car dealers is lessened by the fact that second hand cars
dealers often rewind the tachometer, accounting for 270 000, or 45% of all sold cars on
the market (Chum).
It is estimated that this unethical, illegal practice can earn up to 19 billion annually
(Kulísková). As a result of this, consumers usually option for the purchase of new cars,
and sales are increasing. In other cases, people may decide to purchase a second hand car
in Germany, where there is much stricter legislature protecting such fraud.
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As aforementioned, the largest threat of substitutes is public transport, and the Czech
Republic has well-developed and very effective system. The vast majority of the road
transportation is provided by state, through tram and bus, and among the major private
road transportation corporations are Student Agency and Eurolines. Railway transport has
significant importance in the Czech Republic, and it was established in the 1820s, while
the major road company is also state-owned, called Ceske Drahy. However, within last 10
years, trains from Student Agency, known as Regio Jet and Leo express, have made an
appearance and grow in popularity. However, inner city transportation is dominated by
tram, and in the case of the capital city Prague, the metro.
Finally, taxi services could be taken into consideration as a substitute threat. However, the
Czech Republic, especially Prague is facing continuous problems with cheating taxi
drivers. Thus, customers are willing to spend additional time to wait for a centrally
controlled taxi provided by certain companies rather than to take a taxi from the street.
Overall, the threat from substitutes to personal drivers such as taxis and Uber is strong.
Nonetheless, the EU brought forth a plan called “Single Transportation Area”, which
aims to replace all traditionally powered cars with rail water & electric transportation by
the year 2050 (eur-ex.europa.eu).
5.5 Bargaining power of buyers
Buying power is dependent on how easy it is for buyers to influence prices. Their choice
is affected by how wide a variety of available car companies to choose from and shop for
the best car price to save money (Porter 2008). For regular cars, buyers have relatively
high bargaining power, but low power for ecological cars, particularly electric cars. Thus
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the buyer’s ability to exert control over prices of regular cars is relatively high.
Conversely, the buyer’s ability to exert control over prices of electric cars is very low.
However, buyers who do so in large quantity, such as the government or the pilot
programs provided by CEZ or others companies, would have the ability of causing some
pressure. When talking about brands, demand is quite stable when it comes to purchasing
Skoda vehicles, but there is no such pattern when considering any other car brand (“New
Cars in the Czech Republic” 16). Customers choose cars of different brands based on the
best available promotions an advertising campaign or current fashions. However, it can be
expected that buyers’ power will become stronger, since the demand for new cars is
continually increasing. This is exemplified by the fact that the compound annual growth
in the car industry experienced 6,8% growth from the year 2010-2014. At the same time it
is important to take in account the Czech economy, which is currently performing very
well. Potential buyers in the Czech new car and ecological market tend to enjoy their
growing disposable income: car sales in 2014 accounted for 192,3 thousands units (“New
Cars in the Czech Republic” 16). The interesting information influencing buyer power
might be increasing power of the women choice influence during the process of buying a
car. Women have an impact on more than 80% of positive decisions in the purchasing of
a car (“New Cars in the Czech Republic” 16).
5.6 Bargaining power of suppliers
The bargaining power of suppliers can be described as the ability or power of suppliers to
exert control over prices. When there are few suppliers, their power to control prices is
very high because customers have no other choice but to adjust to their conditions. The
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presence of powerful suppliers reduces the profit potential in an industry (Porter 2008).
On the other hand, when there are more suppliers, applying high pricing could destroy a
particular supplier because the customer is able use any other supplier. The bargaining
power of suppliers thus depends on the supplier’s position in the market. As Porter states,
“Suppliers increase competition within an industry by threatening to raise prices or reduce
the quality of goods and services” (2008). As a result, they reduce profitability in an
industry where companies cannot recover cost increases in their own prices. Key inputs
required by car manufacturers include commodity items, such as metals, as well as more
differentiated input such as fabricated components, produced by other companies rather
than being manufactured in-house (“New Cars in the Czech Republic” 15). The major
customers are Skoda Auto, Mladá Boleslav, TPCA Kolín, and Hyundai Nošovice. Since
they are very concerned with their production, operational and logistic excellence is
required. This, together with flexible replenishment, return logistics, timely delivery, and
Internet availability checks is also demanded is decrease suppliers power. However, in the
case that there are suppliers who meet all challenging requirements from the car factories,
it often results in long lasting relationships that increase supplier power. Offering good
quality raw materials and components to such car manufactures can also increase a
supplier’s power. However manufacturer margins have been affected by globally
fluctuating raw materials prices, such as those of steel and aluminum during recent years
(“New Cars in the Czech Republic” 19). In order to minimize operating costs and
distinguish themselves from rivals, suppliers arrange changes aimed at decreasing
margins and increasing turnover, while improving customer service. The competitive
environment of suppliers for car manufacturing companies is relatively segmented,
although the latest unification in the steel industry might strongly increase supplier
65
power. A key success factor for automotive suppliers is a successful collaboration
between themselves and market players (car manufacturing companies) and the
integration of process through the supply chain (“New Cars in the Czech Republic” 17).
The demand for automotive components is expected to increase as a result of the rising
demand for cars on the Czech market, which is going to strengthen supplier power.
Current power of suppliers is defined as a moderate.
6. Green Mobility In Netherlands
The Netherlands is the only country in the EU that has been able to manage the reinforcement of
transformation towards green mobility, and has done so within a very short time. Such can be
evidenced by the fact that Netherlands, in 2013, achieved the lowest CO2 emissions from new cars
of all 28 EU countries at 109 g/km (Trigg & Telleen 17). Thus it has become the European leader in
green mobility. The key successes of the Netherlands were due to well-designed financial incentives
for consumers at the national and local levels, which have lowered upfront costs considerably, as
well as quickened sales and infrastructure deployment. Another contributing step to the faster
deployment of green mobility was the significant increase in fuel prices.
6.1 Government support
Strong government support of green mobility in the form of favorable policies and
incentives in Netherlands resulted by an unexpectedly high market penetration of electric
vehicles. One of the benefits that was introduced to Dutch buyers was the total exemption
of the registration fee and road taxes in the year 2013. This would spell savings over a time
period of four years, amounting in around €5,324 to private owners, and €19,000 to
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corporate owners over the space of five years (Trigg & Telleen 15). The effect of this
incentive increased the amount of electric cars by 23 084 units; at the end of December
2013, there were 30 086 plug in electric vehicles registered. The total cost benefits for the
Dutch treasury was estimated at € 500 million. After the year 2013, the 4% registration fee
for electric cars and 7% for hybrid cars was once again applied (since January 2014).
The government, with the cooperation of the Ministry of Infrastructure and Environment,
made another national monetary incentive in 2013. It contained a € 3000 subsidy on the
purchase of all electric taxis or delivery vans; and in the larger cities, like Amsterdam,
Rotterdam, The Hague or Utrecht, the subsidy amount increased to € 5000 (government.nl).
Rotterdam also introduced a monetary pull for ecological car purchases by offering € 2500
incentive to first 5000 applicants with the aims for business buyers to replace old vehicles
with all electric cars. At the same time, in order to assure better infrastructure, the Dutch
government backed more than 400 charging points through government incentives (Niet
gevonden, Dutch Statistic office). As a result of the elaborated charging structure, the
Netherlands’ mix of slow and fast chargers has allowed it to become the country with the
highest number of charging points per capita in the world (Triggs & Telleen 7). In many
cases, charging points are close to public parking places and they offer free charging.
Amsterdam, like most capitals, has a high demand for parking places; residents can wait for
a permanent parking place for up to 10 years. The government therefore passed a policy
enabling owners of electric cars to have the privilege over fuel cars and park there for free
(government.nl).
Furthermore, they have enacted a policy supporting research and development focusing on
batteries for electric cars with a 30% of government spending on the project. The Dutch
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government set an example to its inhabitants by targeting a total of 15 000 to 20 000
electric vehicles by the year 2016 (Niet gevonden, Dutch Statistic office). With the purpose
to make fuel cars less appealing, the government supported a high pricing policy of fuel by
significantly increasing excise taxes. As a consequence, Netherlands became a country with
the most expensive fuel in Europe. The average percentage of Dutch wages spent on fuel
can increase up to 10.6% (Central Bureau voor de Statistiek - Central National Statistic
Office of the Netherlands). The overpriced gasoline costs should contribute to higher
demand for alternative fuel vehicles. On the Graph 24 below is a graph of average prices of
fuel in Netherlands between the years 2006 and 2015. Since the year 2011, when the Dutch
started its green mobility policies, the average price of fuel hasn’t dropped than €1, 4 per 1
litter (Central Bureau voor de Statistiek - Central National Statistic Office of the
Netherlands).
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Graph number 24, comparison of Petroleum and Diesel prices from the year 2006 to the
year 2014.
Source: Central Bureau voor de Statistiek (Central National Statistic Office of the
Netherlands)
So far, high fuel prices make the cost of running electric vehicle five times cheaper.
Additionally, when considering the great number of incentives and benefits, electric cars in
Netherlands have similar driving costs to that of conventional cars, and thus are facing
increasing demand.
Netherlands is the first country (at the end of November 2011) in the EU to established
Car2Go car-sharing service. Car sharing schemes in Amsterdam are giving urban citizens
69
first-hand experience with driving an EV, which can then be used to make informed
decisions about EV purchasing (Trigg & Telleen 18). So far there is a fleet of 300 smart
electric drives which are accessible on-demand for those who drive EVs. Some of the
electric vehicle leasing programs also enable its customers free or discounted gasoline
powered cars for long distance journeys. This is possible because Netherlands has an
advantage over other countries in its relatively small landscape, with a total size 41 543km²;
its short distance from East to West stretching 160 km reduces the anxiety of drivers when
considering the small range of EVs.
6.2 The effect of government incentives
On the graph below shows the effect of government incentives on market penetration in the
Netherlands. The most significant increase was in the year 2013, the time where there was
total exemption of the registration fee and road taxes. Similarly, within only three years,
57 400 cars were registered, which shows great progress and success in this matter.
Netherlands aims to increase the total number of electric cars to 1 million by 2025
(government.nl). The Netherlands thus can be served to other countries in EU and the rest
of the world as a great example of a country that has experienced such a big change from
fuel powered cars to more ecological electric cars, mainly as a result of state support based
on government incentives and tax benefits.
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Graph number 25, the number of registered cars in the Netherlands
(Source: Central National Statistic Office of the Netherlands)
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7. Conclusion
In comparison with the Netherlands car market, the Czech market is definitely not prepared
for green mobility. However it is important to take in account that Netherland is so far the
only country in the EU that has experienced such high market penetration for electric cars.
It is also important to mention that according to statistic, the highest increase in the
Netherland was recorded in the year 2013 when there were no registration fees, no road
taxes and at the same time significant parking benefits with the ability of charging cars for
free that are valid until now. Dutch government also advocated the purchase of newer
ecologically friendly vehicles by introducing subsidies for destroying the old cars and at the
same time by additional subsidies for taxi and van drivers. On the other hand the Czech
Republic is in the terms of electric vehicle transportation lagging behind. When considering
that there is still no legal support of green mobility it can be said that situation and
preparedness on its own for the green mobility in the Czech Republic is actually really
behind. The explanation is very simple. How can be corporations interested in building
power stations in the Czech Republic when there are no particular benefits for them,
controversy – building a power station obtains long lasting paper work. At the same time it
is important to mention that there is so far very small target market – targeting the electric
(small amount of drivers demanding electric to charge their cars). In the case that the Czech
government one day decides to accept the bill supporting the green mobility and afterwards
pass it to parliament that would then give it to president who would also agree then
everything would be much easier. There are reasons for skepticism since such bill supposed
72
to be accepted for the first reading in January 2015. Then there was another date in June
2015 which was also canceled and replaced by November 2015. On the base of such
experience it can be hardly said if the government will be in mood to accept the bill in the
November 2015. This shows the incompetence of the Czech legislative system that is
slowing down the application of electric cars in the Czech Republic. Another interesting
think connected with the bill NAPCM is that the significant number of creators was
represented by gas producing companies as well as companies manufacturing cars powered
by gas. It is a question whether the conflict of interest played role or not.
To sum up it can be said that the Czech Republic is so far not prepared for electro mobility.
Unless the bill NAPCM, containing certain benefits for electro mobility would be finally
accepted and thus changed the situation for either corporations or customers on their own.
The current advantage of ownership electric car is so far remission of road tax. No parking
benefits, no tax benefits, no subsidies for early adopters and no subsidies for constructions
of power stations as it could be seen in the Netherland. Thus the ownership of electric cars
so far provides little more than altruistic feelings. As a result of this corporations are not
interested in either enlarging their supply of cars or building additional power stations
because they don’t feel any potential especially for such an expensive activity so far.
On the other hand natural gas transportation, especially when talking about CNG is
experiencing significant upturn. Mainly because of the favorable prices of CNG that makes
expenses for driving 1 km, 1 CZK. Which is for Czech people with the average income of
26 287 CZK very affordable. Another benefit is as well as in the green mobility the
remission of a road tax. When taking this into account running CNG car is much more
accessible for Czechs than electric cars, unless there would be a significant government
73
aiming to support electro mobility like in the Netherlands. Since gas producing and CNG
car manufacturing companies took a part on a bill supporting the green mobility it can be
expected that such a bill will support CNG mobility rather than electric mobility. The main
disadvantages of CNG mobility in the Czech Republic are obsolete parking places
forbidding parking for CNG cars and possible rise of excise tax in the 2020 which would
make this way of transportation more expensive.
In conclusion, according to this analysis it might be recommended to potential investors to
take in account rather CNG mobility rather than electro mobility. However for investors
aiming to target wealthy household that would have electric car as a second, city car it
could be a good decision. Because net of charging stations in the cities supposed to be fully
functioning until the year 2020.
74
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APPENDICES
Photo 1
CEZ pilot program showing how to start electric car as well as its quietness during starting
the engine
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Photo 2
Satisfied participants of pilot project organized by CEZ.
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Photo3
Customers test new model of BMW electric car. Organized by CEZ as part of its pilot
project.
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Photo 4
AC power charging station for electric cars. Providing by CEZ.
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Green Mobility in the Czech Republic
Questions for Interviews
Vasek Fojtik
CEO of Skoda Auto Jarov
September 11, 2015
1. What do you think about green mobility in the Czech Republic?
2. Does it have a future in the Czech Republic?
(a) Electric mobility
(b) CNG mobility
3. Are you current seeing any consumer interest in green mobility?
4. Are corporations demanding eco-friendly cars?
5. Do you plan in the near future to offer more electric cars?
6. Would it be profitable to enlarge your electric car fleet?
7. What are the disadvantages for as the biggest dealer in Prague?
Peter Zaluda
CEO of OLife
September 10 2015
1. What is your mission and vision for the company?
2. Why did you decide to go into such a risky field?
3. How did you find out Horizon 2020 that provided you with such huge subsidies?
(a) How did you cope with the stress involved, especially considering you are the only
person in CZ to apply?
4. What are your plans for the future?
5. Will you expand to foreign markets?
6. Who is your target market?
7. What’s your position towards ecology?