February 19, 2016

Can Norway save the electric vehicle market?

In contrast to the drop in Plug-in Electric Vehicle (PEV) sales in 2015 in the US, the PEV market in Norway seems to be quite vigorous. In March 2014, more than one percent of all passenger cars on the road in Norway were PEVs and by March 2015, this number grew to 2%, and PEVs represented 26.4% of the new car market. The goal to reach 50,000 zero emission vehicles by 2018, set by the Parliament of Norway, was achieved on 20 April 2015 – 2.5 years earlier than expected. Norway has the largest fleet of PEVs per capita in the world, and most likely the cleanest since about 99% of electricity is generated through hydropower.

Multiple incentives encourage EV adoption in Norway. First, all electric cars in Norway are exempt from purchase taxes and the 25% value added tax (VAT). This makes the price of PEVs quite competitive with conventional cars. Secondly, free public charging, free toll roads, free parking, access to bus lanes and low annual road fee are also important EV incentives. Last but not least, the negative incentives on gasoline use push people toward electric vehicles. Norway has one of the highest gasoline prices of any country in the world, about 2.6 times of gas price in USA.

The public charging infrastructure for PEVs in Norway is relatively more abundant than in other countries. Take US as an example, the current number of public charging station is 11,059 and the current number of electric vehicles registered in the country is about 373,000, meaning that each public charging station serves an average of 33.7 PEVs. In Norway, with 5,611 public charging stations serving 23,390 PEVs, every station only needs to cover 4.2 PEVs.

In addition to these policy incentives and sufficient infrastructure for PEVs, high income and high electric vehicle awareness also helped increase EV adoption. Common Norwegians are not only aware of what an electric vehicle is and what models are offered in the market, they are familiar with the benefits of EVs, policy incentives, and where PEVs are usually charged. The worlds’ largest EV charging garage in Oslo (the capital of Norway and the EV capital of the world) is prominent right in the city center, which greatly increases awareness among the public.

Despite the progress that Norway has made in EV adoption, there are a lot of discussions of the possibility that electric vehicles might be too popular. Bjart argues that these incentives have encouraged people with high income to buy a second car, which brings more cars to the road system and causes congestion in bus lanes and parking difficulties in the city center. He also argues that the reductions in CO2 emissions achieved by the electric vehicles are not enough to offset the high cost of the incentives. It remains to be seen how long Norway can sustain its ecosystem of strong supports for the PEV market, and what will happen if and when those supports are removed.