Iceland: From Financial Ruin to Green Car Oasis

Jim Motavalli

Jim Motavalli | Sep 24, 2010

REYKJAVIK, ICELAND -- When I told people I was going to Iceland, they couldn't believe it. "Iceland!

Wow!" They act like it's one of the world's most remote spots, but in fact it's a comfortable five-hour flight from New York. You don't need dog sled teams. They've heard of Car Talk there, honest.

And they drive cars there; the reindeer are in those other Nordic countries. In fact, Iceland (which is tiny, with just over 300,000 people, 75 percent of them in the capital city) was once the most prosperous country in Europe, but its dramatically overextended banks plunged the country into a financial crisis in 2008, and it is not recovered yet. One Icelander told me a story straight out of Wall Street: He was a millionaire on paper through his highly leveraged real-estate transactions, but then woke up to discover he owed $10 million to the banks. That's a lot of Icelandic kronor.

Iceland still looks relatively prosperous, though, and there are no breadlines or ragged folks selling apples on the street corners. But the auto market in Iceland has taken an 80 to 90 percent plunge since 2008. Many of the dealerships are in the hands of banks and the government, and few Icelanders can afford a new car. Think about that for a while. If U.S. auto sales fell that far, every car maker would be declaring bankruptcy right now. The showrooms that now see light travel would be abandoned to the elements. Here's a brief interview with an Icelandic Toyota representative about his country's auto meltdown:

I was in Reykjavik to attend the annual Driving Sustainability conference, which brings in green car experts from around the world. I was a speaker this time, and enjoyed the banter with representatives of Toyota Motor Europe, Tesla, Mitsubishi (which is offering both the I-MiEV electric car and a new fleet of EV buses with switchable battery packs) and many more. We even had a visit (via Skype) from Chris Paine, whose new film Revenge of the Electric Car will feature a segment on Iceland.

Why Iceland? Because it's trying to be the first country in the world with an all-electric transportation network. It has a lot of natural advantages, including its small, concentrated population and 100 percent renewable electricity (from geothermal and hydro). I visited one of the geothermal plants, and watched 40 megawatts of steam escaping from a well dug deep into the earth:

Despite the recession, two Icelanders named Gisli Gislason and Sturla Sighvatsson are forming a company called Even that is taking some first steps to put green cars on the road. It has the first 50 of a planned 100 major players signed up, and they've agreed to not only put chargers (from AeroVironment) in front of their businesses but also are pledging to convert their fleets to EV as soon as their current leases run out. Here's Gisli Gislason on video:

Iceland's big problem has been getting green vehicles. The country's on the end of a very long supply chain. An earlier plan to run the country's fleets (including the fishing boats that are the island's economic mainstay) was stillborn when the initial fleet of three Daimler fuel-cell buses left after three years and couldn't be replaced. But Gislason is thinking ahead: He owns the first Tesla in Europe, and has ordered an incredible 1,000 Tesla Model S cars (no wonder Elon Musk knows his name) and will have the first order of the new Reva electric cars from India.

Gisli Gislason in Reykjavik with the first Tesla Roadster in Europe. (Jim Motavalli photo)
Gisli Gislason in Reykjavik with the first Tesla Roadster in Europe. (Jim Motavalli photo)

The first of Even's fleet is arriving soon from Smith Electric Vehicles, and the local Coca-Cola distributor (they don't all drink mead) is taking one of the 20 in the shipment. Ther are more than 200,000 cars in Iceland (many of them huge SUVs with even bigger tires used for off-roading), so converting the whole fleet will take a while.

But there are some tailwinds here. For one thing, Olafur Ragnar Grimsson, the country's president (who granted me an interview in the official residence last year), is all for EVs. "We can be the first country to move over to 100 percent clean energy for all land-based activity," he said at the conference. "We can be a global leader in clean energy, and send an important signal to the rest of the world. My message here is that we can do it." In Grimsson's lifetime, the country stopped generating electricity from dirty coal and oil, replacing those expensive imported fuels with clean local geothermal and hydro, so anything's possible.

I admit I'm partisan here: I want Iceland to succeed with its plan. This is a really green country in many important ways, the food is good, the women beautiful, and I'd love to see them lead the world to electric transportation.

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