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e-Mobility around the world
Why Norway’s automotive market is “electrified”

Guest article by WEKA Publishing Inc.

With a market share of 48 percent, e-cars are more successful in Norway than almost anywhere else. The government spends millions on incentives for carbon-neutral vehicles. But for how much longer?

While alternative drives are still serving a niche market elsewhere, they have long been widely accepted in this far northern country. 46.6 percent of newly registered passenger cars in Norway are electric. As a comparison: At last count, this figure was only 2.5 percent in Austria. “Norwegians are happy with their e-cars. In a recent survey, 73 percent of e-car owners said that they inspired at least one other person to also switch to an emission-free car,” says Erik Lorentzen, Head of Analysis and Consultancy of the Norwegian EV Association.


The popularity of e-cars here is not only due to word-of-mouth recommendations. People who drive emission-free cars in Norway pay at most only half the toll, half the parking fee, half the ticket price for the ferry, and they are allowed to drive in the bus lane. The purchase price for the carbon-neutral vehicles is also lower because e-car buyers do not have to pay the 25 percent value-added tax. Lorentzen: “ A new Volkswagen e-Golf costs EUR 33,286, gross for net. A Diesel-driven Golf costs EUR 22,295 net. In addition, you have to pay the CO2 tax (EUR 4,348), the NOx tax (EUR 206), the vehicle tax (EUR 1,715) and the value-added tax (EUR 5,512). This means that in the end, the car buyer pays for this Diesel Golf EUR 34,076 – which is more than for the e-Golf.”

The EFTA problem

Just by waiving the value-added tax, the government loses EUR 325 million in income per year. But this may soon be a thing of the past. As a member of EFTA, the European Free Trade Association, Norway is bound by agreements with its neighboring countries. And the EFTA supervisory authority has approved the value-added bonus for e-cars only until the end of 2020 – to “avoid overcompensation which will benefit neither the market nor consumers.”

Most recently, the scientific community has also been critical of Norway’s incentives which are worth millions. In the “Nordic Economic Policy Review” published in mid-May, scientists from the Research Center of the Nordic Council of Ministers recommend that the government reduce incentives for e-cars and invest, for instance, more in expanding the public transportation network instead. “The emission tax makes sense, the incentives don’t. The latter cause unnecessarily high costs. Other methods are clearly more efficient,” says economist Bengt Kriström, co-author of the review.

Bus lane for Tesla

Dominik Fasthuber, e-mobility expert at the Vienna University of Technology, counters: “In an early phase, new technologies which cannot yet keep up with the price competition do need reasonable incentives.” BUT: “At some point, this has to stop. It is certainly not in the interest of Norwegians when all bus lanes are jammed with upstart Tesla drivers.” “  

Totally emission-free starting in 2025

E-car proponent Lorentzen essentially agrees that there will come a time when incentives have to be scaled back. But you cannot cut them off overnight. “ The Norwegian government has pledged to no longer permit new registrations of internal combustion cars starting in 2025 and to register only emission-free vehicles. This will take effect in six years.” But e-cars are not yet ready to stand up to competition without incentives. The e-car lobbyist cautions: “If we cut back on incentives starting in 2021, it has to be predictable and gradual.”

How will that impact demand? Norway’s e-drivers have already experienced the withdrawal of preferential treatment. They are now only allowed to use the bus lane in Oslo during rush hour if there is at least one passenger in the car. Still: The e-hype in Norway seems to continue unabated. The government’s goal set in 2012 to have a total of 50,000 e-cars on the road by the end of 2018 was far exceeded. Norway has already 195,351 electric passenger cars – and there are more every day


Erik Lorentzen: “If we cut back on incentives starting in 2021, it has to be predictable and gradual.”
Bengt Kriström: “The emission tax makes sense, the incentives don’t.”
Dominik Fasthuber: It is certainly not in the interest of Norwegians when all bus lanes are jammed with upstart Tesla drivers.”

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