Norwegian lead in electric vehicles may soon shrink

Incentives for EVs were more effective than expected, but may come to an end soon

Peugeot EV ad in March 3 edition of Aftenposten; headline reads: “Drive in the Public Transport Lane Tomorrow!”

M. Michael Brady
Asker, Norway

Compared to the total number of vehicles on the road, the number of plug-in electric vehicles in Norway is greater than anywhere else in the world. As of late February 2015, there were 44,585 registered electric vehicles (EVs), 1.8% of the total number of cars in the country. In perspective, the same percentage in the U.S. would work out to 4.5 million electric vehicles.

The large number of EVs is a result of governmental incentives promoting them. The principal incentives are financial. Upon purchase, an EV is exempt from Engangsavgift [“Registration tax”], which can be appreciable. The tax is reckoned on the basis of vehicle weight, motor horsepower, and CO2 emission. For a typical gasoline-fueled small car, the Engangsavgift is around NOK 66,631 ($8,553). A new EV also is exempt from 25% Merverdiavgift (MVA) [“Value-Added Tax (VAT)”], which for a typical small car with a pre-tax retail price of NOK 150,000 ($19,255) amounts to NOK 37,500 ($4,813). In use, an EV is subject to a lowered Årsavgift [“Annual road tax and traffic injury tariff”] of NOK 435 ($56), compared to NOK 3,060 ($393) for a gasoline-fueled car. It also pays no road tolls and parks free at public charging and parking stations.

There’s also the non-fiscal incentive of EVs being allowed to drive in dedicated public transport lanes marked for use only by busses and taxis. In rush-hour traffic around cities, the time saved by driving in the public transport lane can be significant. In December 2013, Budstikka, the local newspaper of the suburbs of Asker and Bærum just south of Oslo on the west bank of the Oslo Fjord, conducted a rush-hour driving time test northward from Asker through Bærum to Skøyen, the district of Oslo at the southern city limit. The travel time for the car driving in the two lanes of the E18 highway to the city was 31 minutes, while for an EV in the dedicated Public Transport Lane it was only 13 minutes. For Asker and Bærum, two of the wealthiest communities in the country, the cut in rush-hour travel time is most likely the main attraction of an EV. So the numbers of EVs registered in the greater Oslo region, including Oslo, Asker, and Bærum, are the greatest in the country, most of them as second cars, and in turn many high-end Tesla sedans and roadsters. Accordingly, many of the EV car dealers of the region have made Public Transport Lane driving their principal sales pitch.

The prevalence of EVs now is threatened. In its original legislating of the incentives for EVs, the Storting set a limit of 50,000 EVs registered. Initially, that number was expected to be attained sometime in 2017. But with more than 40,000 EVs now registered and sales brisk, that limit is expected to be exceeded by May 5 this year. Political maneuvering concerning the fate of the incentives now is going on.

In Denmark, where similar incentives may be cancelled later this year, a national report on energy and climate released in 2014 concluded that without incentives, EV sales will drop drastically. In Sweden, cars are cheaper than in Denmark or Norway, and there are no EV financial incentives. So for cars of similar size and performance, an EV is more expensive than a conventional car. Accordingly, there are comparably fewer EVs in Sweden. Whether or not that will be the scenario for EVs in Norway remains to be seen, as the bugbear of cancellation of EV incentives in Norway may emerge this spring.

This article originally appeared in the March 20, 2015, issue of the Norwegian American Weekly. To subscribe, visit SUBSCRIBE or call us at (206) 784-4617.