Norway became the first country in the world where the sale of electric cars has overtaken those powered by petrol, diesel and hybrid engines last year, with the German carmaker Volkswagen replacing Tesla as the top battery-vehicle producer, data shows. Battery electric vehicles (BEVs) made up 54.3% of all new cars sold in the Nordic country in 2020, a global record, up from 42.4% in 2019 and from a mere 1% of the overall market a decade ago, the Norwegian Road Federation (OFV) said.
Seeking to become the first nation to end the sale of petrol and diesel cars by 2025, oil-producing Norway exempts fully electric vehicles from taxes imposed on those relying on fossil fuels.
The policy has turned the country’s car market into a laboratory for carmakers seeking a path to a future without internal combustion engines, vaulting new brands and models to the top of bestseller lists in recent years. While the sale of BEVs had broken the 50% mark in individual months, 2020 was the first time that fully electric cars outsold the combined volume of models containing internal combustion engines for a year as a whole.
“We’re definitely on track to reach the 2025 target,” said Øyvind Thorsen, the chief executive of OFV.
BEV sales accelerated in the final months of 2020, hitting their highest level for any single month in December, with a 66.7% share of the car market. Volkswagen’s Audi brand topped the 2020 leaderboard with its e-Tron sports utility and Sportback vehicles as the most sold new passenger cars in Norway last year, while Tesla’s mid-sized Model 3, the 2019 winner, was relegated to second place. Electric vehicle sales are expected to continue to soar in 2021, according to industry analysts and car distributors, as more models are brought to the market.
“Our preliminary forecast is for electric cars to surpass 65% of the market in 2021,” said Christina By who heads the Norwegian EV Association, an interest group. “If we manage that, the goal of selling only zero-emission cars in 2025 will be within reach.“ Tesla’s mid-sized sports utility vehicle, the Model Y, is due to reach the Norwegian market this year, as are the first electric SUVs from Ford, BMW and Volkswagen.
By contrast, cars with diesel-only engines have tumbled from a peak of 75.7% of the overall Norwegian market in 2011 to just 8.6% last year. New car sales in the country last year were 141,412, of which 76,789 were fully electric.
While the electric market share will keep rising, there is uncertainty around how many cars producers will allocate to Norway as European demand is increasing, said Harald Frigstad, the chief executive of the Norwegian car importer Bertel O Steen. The seller of Daimler’s Mercedes-Benz as well as the Kia, Peugeot, Opel, Citroën, DS and Smart brands, predicted about 70% of its sales would be fully electric models in 2021.
HOW DID NORWAY MANAGE THIS
How did the Nordic nation get to this point, and are there some lessons here for other countries that would like to break their oil addiction? Ironically, the best account of Norway’s rise to EV stardom that we’ve seen lately was written on the other side of the globe. As Bevan Shields writes in the Sydney Morning Herald, the story began in the 1980s, with a couple of environmentalists who drove the Norwegian roads in a converted Fiat Panda. They felt that EVs should be exempt from tolls, so they regularly tool tided through toll booths without paying. This led to the car being impounded and put up for auction, but nobody else wanted their homemade EV, which had a range of only 45 kilometers, so they were able to buy it back for a mere 200 Norwegian kroner.
This act of green civil disobedience generated a lot of publicity, and activists pressured the government to establish incentives to drive electric cars. Norway made EV drivers exempt from tolls in 1997, granted free parking in 1999, and began allowing EVs to use bus lanes in 2003. What really got the electric ball rolling was a series of tax reductions. Like many European countries, Norway imposes various taxes—import tax, registration fee, company car tax—on automobiles, and EVs are exempt from most of these. The country’s value-added tax can be up to 25 percent for a gas-burner, but for an EV, it’s zero. This means that even a luxury EV such as a Tesla can be cheaper than a mid-price legacy vehicle. (Now that EVs have become so prevalent, there’s been talk of rolling some of these goodies back.)
Norway’s Northern European neighbors are also EV leaders. In the number-two spot is Iceland, where electrified models accounted for just over half of vehicle sales last year. Number three is Sweden, with 32 percent, followed by the Netherlands (25 percent) and Finland (18 percent). In the US, sales of pure EVs were a paltry 1.7 percent in 2020. The Morning Herald’s Bevan Shields laments that Australia lags far behind the global pack with a pitiful one percent.
What can governments do to boost their countries’ rates of EV adoption? Norway’s Climate and Environment Minister Sveinung Rotevatn told the Morning Herald that it’s all about the convergence of better vehicle performance and lower prices. “Money talks, and I don’t think you can reasonably expect people to sacrifice their family’s economy to save the environment. People do want to make an effort for the environment but your wallet matters and most aren’t willing to spend 10,000, 20,000 or 30,000 euros extra on buying a car—that’s the simple truth.”
“If an environmentalist tells me they’ve just bought an electric car, I’m not impressed by that,” says Rotevatn. “But when people—some who don’t even believe in climate change—buy electricity, that’s when I pop the champagne corks. And that’s the only way you’re ever going to stop global warming: to make it profitable for consumers.” Of course, Norway has advantages other countries don’t, including trillions in oil revenues, which it is basically using to bankroll the transition to EVs. “Yes, we are forgoing revenue from not taxing [electric] vehicles, but we also have huge revenue from taxing fossil fuel vehicles and petrol that other countries are forgoing voluntarily,” Rotevatn says. “Most other countries don’t have as high CO2 taxes on fuel as we have. Most countries don’t have as high a VAT rate. Most countries don’t have special taxes on fossil fuel cars when you buy them. So, I would tell them to start there.”
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