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Plug-in electric vehicles in Norway

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Through Renewable energy, Hydropower and Value-added tax

The Norwegian plug-in car segment market share has been world's highest for several years, achieving 29.1% of new cars sold in 2016, 39.2% in 2017, 49.1% in 2018 55.9% in 2019, 74.7% in 2020, and 88.9% in 2024. The record uptake rate achieved in 2020 allowed Norway to become the first country in the world where annual sales of all-electric cars outsold the combined volume of all passenger cars with internal combustion engines. In January 2024, the share of combined EV was 93.9%: 92.1% full electrics (BEVs), and 1.8% plugin hybrids (PHEVs).

According to a 2018 analysis by McKinsey & Company, Norway has already reached a critical mass of electric vehicles. Therefore, the country is the only one in the world in the third stage of a disruptive trend, and the EV disruption is inevitable.

As of 31 December 2021, the stock of light-duty plug-in electric vehicles in Norway totalled 647,000 units in use, consisting of 470,309 all-electric passenger cars and vans (including used imports), and 176,691 plug-in hybrids. Norway listed as the top selling plug-in country market in Europe for three consecutive years, from 2016 to 2018. The Nissan Leaf is the country's all-time best selling plug-in electric car, with over 65,500 units registered through 2020.

The fleet of electric cars is one of the cleanest in the world since about 98% of the electricity generated in the country comes from renewable energy sources, mainly hydropower. In 2017, and as a result of its fast growing EV adoption, Norway was able to achieve its climate target for average fleet CO2 emissions (85 g/km) for new passenger cars three years earlier than pledged.

The adoption and deployment of zero emission vehicles in Norway has been driven by policy, and actively supported by the government since the 1990s. In addition to non-monetary incentives, all-electric cars and vans are exempt from all non-recurring vehicle fees, including purchase taxes, and 25% VAT on purchase, making electric car purchase price competitive with conventional cars. Also, a tax reduction for plug-in hybrids went into effect starting in July 2013.

In 2015 the Parliament agreed to reduce and phase out some of the incentives beginning in 2018. Also local authorities were granted the right to decide whether electric cars can park for free and use public transport lanes. In 2016, through its National Transport Plan 2018–2029 (NTP), a goal was set for all sales of new cars, urban buses and light commercial vehicles by 2025 to be zero emission vehicles.

Several unintended consequences have resulted from the successful policies implemented to promote EV adoption, and raised several complaints and criticism. These include: high public subsidies as compared to the value of the reduced carbon footprint of electric vehicles; the possibility of traffic congestion in some of Oslo's bus lanes due to the increasing number of electric cars; the loss of revenue for some ferry operators due to the large number of electric cars exempted from payment; and the shortage of parking spaces for owners of conventional cars due to preference to electric cars.

Government goals and incentives

Existing incentives

The adoption and deployment of electric vehicles in Norway, particularly zero emission vehicles, has been driven by policy, and since 1990, actively supported by the Norwegian government. The Parliament of Norway set the goal to reach 50,000 zero emission vehicles by 2018. Among the existing incentives, all-electric cars and utility vans are exempt in Norway from all non-recurring vehicle fees, including purchase taxes, which are extremely high for ordinary cars, and 25% VAT on purchase, together making electric car purchase price competitive with conventional cars. As an example, by early 2013 the price of the top selling Nissan Leaf was 240,690 kroner (around US$42,500) while the purchase price of the 1.3-lt Volkswagen Golf is 238,000 kroner (about US$42,000). Electric vehicles are also exempt from the annual road tax, all public parking fees, and toll payments, as well as being able to use bus lanes. These incentives are in effect until the end of 2017 or until the 50,000 EV target is achieved.

Sales of plug-in hybrids have had a much smaller market penetration than pure electric car sales. Plug-in hybrids are not eligible for the same tax exemptions and other government incentives enacted for electric cars. Because the Norwegian tax system levies higher taxes to heavier vehicles, plug-in hybrids are more expensive than equivalent petrol and diesel-driven cars due to the extra weight of the battery pack and its additional electric components. Beginning on 1 July 2013, the existing weight deduction for conventional hybrids and plug-in hybrids of 10% was increased to 15% for PHEVs. The weight deduction was increased to 26% effective since January 2015. This fiscal incentive combined with a broader range of models available in the market resulted in record sales of plug-in hybrids in 2015, with almost 8,000 new units registered, up from about 1,700 in 2014. The plug-in hybrid market share rose to 5.2%, up from just over 1% in 2014, and from 4.2% in September 2015 to 13.9% in September 2016.

The government set identifying letters ("EL", "EK", "EV" and "EB") for use on licence plates of electric vehicles to facilitate the enforcement of EV incentives and perks such a free parking, free passage through toll booths etc. Correspondingly, hydrogen vehicles have "HY" as identifying letters. There is no equivalent for plug-in hybrids.

As the number of registered electric cars and vans reached 60,000 units by July 2015, and because the "EL" prefix was set to end at "EL 99999" (most vehicles in the country have five-digit registration numbers between 10000 and 99999), the Norwegian Public Roads agency opted for the prefix "EK" for the second series of plates, to signify "elektrisk kjøretøy", Norwegian for electric vehicle. The "EV" prefix was set aside for future electric cars.

In July 2016, the first electric vehicles registered with the new "EK" series were on the road. About 90,000 pure electric vehicles have been registered by the end of August 2016, depleting the "EL" prefix plates. Just over two years later, in July 2018, the "EK" series was depleted, and the prefix "EV" plates were deployed. The first vehicles with the "EB" prefix series were registered in September 2019. The prefix "EB" stands for "elektrisk bil", Norwegian for electric car. The next special series will be "EC" with no particular meaning.

In September 2013, the Norwegian Parliament approved, as part of the revised 2014 budget, an exemption from the 25% VAT for leasing electric vehicles effective on 1 January 2014. However, as of September 2014, the exemption had not gone into effect because the Minister of Finance decided to deferred the measure, pending a formal consultation with the EFTA Surveillance Authority (ESA) to ensure that the VAT exemption for leasing was not in violation of the European Economic Area (EEA) Agreement. The government's loss of revenue due to the still not implemented leasing exemption is estimated at 47 million kroner (around US$7.3 million) per year. One Member of Parliament has criticised the government for the delay. He argued that the initial VAT exemption for all electric vehicles was never approved in ESA. In addition, an ESA spokesman confirmed that the Government has not sent any request as of September 2014, nor has the agency received any complaints about Norway's original EV tax exemption. The MP said he would demand that the decision be implemented when Parliament meets in October 2014. The consultation was presented to ESA in November 2014, and the authority ruled in April 2015 that the implementation of the VAT exemption on leasing of electric vehicles and electric vehicle batteries is in line the EEA Agreement, since the goal is to reduce greenhouse gas emissions. The approval from ESA initially applies until the end of 2017, but the government can apply for an extension if the zero rate for VAT is kept. The exemption for leasing of electric vehicles went into effect in July 2015.

The target of 50,000 electric cars on Norwegian roads was reached on 20 April 2015, more than two years earlier than expected. The milestone was commemorated by the Norwegian Electric Vehicle Association in Drammen where the 50,000th electric car registered, a Tesla Model S, was granted the licence plate "EL 60000." The special electric vehicle series began with "EL 10000." By reaching a stock of 50,000 electric cars, the market penetration of pure electric vehicles reached 2% of all passenger cars registered in Norway. The milestone of 100,000 light-duty battery electric vehicles was achieved in December 2016, representing about 10% of all pure electric cars that have been sold worldwide. According to the Norwegian Electric Vehicle Association, if the country wants to reach the ambitious climate goals set by the Parliament, the next goal is to have 400,000 battery electric vehicles by 2020. However, by early June 2020, the 300,000th light-duty battery electric vehicle was registered.

Phase out of incentives

As one of the criteria to end the incentives was achieved, as of April 2014, no decision was made by the authorities about the reintroduction of the 25% VAT on purchase of electric vehicles. Among the options considered by the government were to introduce the tax in a step-wise fashion. However, Prime Minister Erna Solberg announced the government decided not to make any changes about the electric car benefits in the 2015 budget.

In early March 2015, negotiations began among parties represented in the Parliament to define the future of all motor vehicles and fuel taxes. The Liberal Party wanted all the benefits to continue beyond the established quota. The Ministry of Finance also made a comprehensive review of all motor vehicle taxes. The two purchase tax exemptions cost the government about 3 billion kroner (around US$480 million) in lost revenue just in 2014, and up to 4 billion kroner (around US$640 million) if all the other benefits are accounted for. In May 2015, the Government decided to keep the existing incentives through 2017, and the political parties in Parliament agreed to reduced and phase out some of the incentives. Beginning in January 2018, electric car owners will be required to pay half of the yearly road licence fee and the full rate as of 2020. The value-added tax (VAT) exemption for electric cars was scheduled to end in 2018, but replaced by a new scheme, which may be subjected to a ceiling that could be reduced as technology develops. The agreement also gave local authorities the right to decide whether electric cars can park for free and use public transport lanes.

In March 2016, the Ministry of Transport issued new regulations for parking in locations with access to the general public. The new parking regulations, that went into effect on 1 January 2017, terminated the free parking for zero-emission vehicles, but established that Municipalities are allowed to introduce payment exemption for electric and hydrogen powered motor vehicles on municipal parking locations. As of September 2016, the municipal councils of Trondheim Municipality and Tønsberg Municipality decided to introduce full payment for EVs from 2017; the cities of Bodø and Tromsø introduced payment for parking in downtown but exempted parking outside the city's center; and the cities of Oslo, Mandal and Drammen decided to keep free parking for zero-emission vehicles. As of January 2018, 24 out of 58 major municipalities kept the free parking for EVs. Among the 34 municipalities that terminated the benefit, six kept different variants of partial free parking.

For the 2017 National Budget, the Government proposed to extend the VAT exemption for zero-emission vehicles until 2020. It also put forward a national rule to keep a maximum tax rate of zero-emission vehicles equal to half the value charged to conventional cars. The budget proposal also included an adjustment to exempt plug-in hybrids from the higher taxes levied to heavier vehicles, and instead, to charge taxes based on their fuel economy under the New European Driving Cycle (NEDC). Until 2016, all plug-in hybrids had a weight allowance of 26% regardless of their all-electric range or fuel efficiency.

In October 2017, the National Government proposed in its 2018 Budget a new tax for EVs based on weight. This proposal would affect mainly bigger electric car models, all Tesla vehicles, and in particular the Tesla Model X. After some public controversy, the proposal was dropped. Nevertheless, Tesla's sales surge at the end of 2017 for consumers' fear of the introduction of the new tax.

Goals for 2018–2029

In February 2016, the government opened for public discussion until 1 July 2016 the proposed National Transport Plan 2018–2029 (NTP). The plan explains that the transportation sector accounts for emissions of about 16.5 million tons of CO2, which is about one third of the total greenhouse gas emissions produced domestically in Norway. And road traffic, including both private cars and heavy vehicles, account for about 10 million tons of CO2. The NTP set policies and actions to reduce greenhouse gas emissions from private cars, trucks, ships, aircraft and construction equipment by about one half until 2030.

In order to achieve this objective, among others, the NTP sets the goal for all sales of new cars, urban buses and light commercial vehicles in 2025 to be zero emission vehicles, this is, all-electric and hydrogen vehicles. By 2030, heavy-duty vans, 75% of new long-distance buses, and 50% of new trucks must be zero emission vehicles. Also, by 2030, 40% of all ships in short sea shipping should be using biofuels or be low- or zero-emission ships. The proposed strategy states that until zero-emission vehicles take over, all internal combustion engine cars sold be plug-in hybrids, and wherever possible, biofuels must be used. Also, government agencies should as far as possible make use of biofuels, low- and zero-emission technologies in private and hired vehicles and vessels. The plan also calls to support the deployment of zero emission vehicles, but also for the reduction of the existing incentives, and proposes to invest more in public transport, walking and cycling.

Criticism of the incentives

Since 2013 several complaints and criticism have arisen due to the rapid increase in the number of electric vehicles on the roads as a result of the existing incentives to promote EV adoption, and particularly about the non-fiscal incentives. These include high public subsidies as compared to the value of the reduced carbon footprint of electric vehicles; the travel mode shift by people who buy an electric vehicle as a second car instead of taking buses and trains; the potential traffic congestion in Oslo's bus lanes due to the increasing number of electric cars; the loss of revenue for some ferry operators due to the large number of electric cars exempted from payment; and shortage of parking spaces for owners of conventional cars due to preference to electric cars and lack of a cap on parking time.

Excessive subsidies

According to the results of a study published by Reuters in March 2013, prepared by Bjart Holtsmark, an analyst of Statistics Norway, the tax exemptions on the purchase of an electric car are worth almost US$11,000 in comparison to the fully taxed price of a regular internal combustion engine car, which is equivalent to US$1,400 a year over a car's lifetime (8 years). The value of the toll exemption for driving into Oslo are worth US$1,400 per year, the free parking is worth US$5,000 per year, and electric cars avoid other charges worth US$400 a year. Without adding value to the benefit of driving in bus lanes, the annual benefit of owning an electric car in Oslo is estimated at US$8,200 per car, per year. The analysis used a Toyota Prius Plug-in Hybrid as the benchmark vehicle. Mr. Holtsmark also pointed out that "by encouraging people who can afford it to buy a second car instead of taking buses and trains, the electric car scheme may ironically be aggravating environmental problems and causing traffic jams".

The Norwegian project Grønn bil (Green Car) disputed these figures because they consider the analysis is based on unrealistic assumptions. The group argues that the analysis used a very short total vehicle lifespan of 7.8 years, while Norway's average is closer to 18 years; it is very unlikely that a vehicle can be parked in Oslo between 1,875 hours and 3,000 hours per year to save the estimated US$5.000 considering the existing time limits for parking; and the typical EV owner drives around 15,000 km (9,300 mi) per year, not the 6,500 km (4,000 mi) implicit in the analysis. Using what they consider more realistic assumptions, Grønn bil estimates that the annual benefit of owning an electric car in Oslo is estimated at US$3,336 per car, per year, 40% of Holtsmark's estimation. They also found that the cost per tonne of CO2 emissions reduced is US$2,499, not the US$13,600 estimated by Holtsmark.

Bus lane congestion

In December 2013 the newspaper Budstikka conducted an informal test to measure the difference in travel time between an electric car and a petrol-driven car during the morning rush hour on a stretch of road between the suburban municipality of Asker in Akershus, and Skøyen, a neighbourhood of Oslo. The electric car completed the trip in 19 minutes using the bus lane while it took 51 minutes for the conventional car travelling in the normal lanes. Around noon, the same trip took the electric car just 13 minutes.

Budstikka also did a count of the number of vehicles travelling in the bus lane during the rush hour on 3 December 2013. The newspaper found that a total of 829 vehicles used the bus lane between 7:30 and 8:30 am, of which, 618 vehicles were electric cars (74.5%). Buses accounted for only 7.5% of the traffic in the bus lane, and taxis, two-wheelers and mini-buses made up the rest. The deputy director of the Institute of Transport Economics (TØI) explained that the normal capacity of a highway lane is between 1,800 and 2,000 vehicles per hour, but because of the ramp entrances and exits, and the buses manoeuvring in and out the bus lane to do their stops, the traffic flow starts to become troublesome when the number of vehicles in the bus lane is about 1,000 vehicles per hour. Although by December 2013 the traffic is approaching this limit, TØI's Deputy Director did not want to predict when this critical situation will occur. The Manager of the green car advocate group Grønn Bil warned that "if the only reason people bought an electric car is to drive in the bus lane, they will probably be disappointed sooner or later".

By mid-2014, bus drivers in some parts of Oslo begun complaining about the delays caused by the ever-increasing number of electric cars. An interviewed bus driver expressed his concern that the electric cars "can create a vicious circle – tired of being stuck in traffic, bus users could be tempted to buy an electric car themselves, worsening the congestion problem." According to the Norwegian Public Roads Administration, as of August 2014, electric cars represent 85% of traffic in the bus lanes during rush hours. As of late August 2014, Norwegian ministers are under increasing pressure to reduce the non-financial incentives and tax breaks for electric cars in order to reduce a rising congestion problem, but no decision has been made by the central government authorities. The success of electric car adoption was unexpected, as the authorities planned to keep the incentives in place until the end of 2017, or until they reach 50,000 units. At the pace of sales reached during 2014, the target of 50,000 EVs registered could be met by April or May 2015.

According to local authorities from the city of Oslo, the negative effects on the bus lanes occur only at certain places and in certain times of the day, particularly at the Norwegian National Road E18, west of Oslo. The problems are concentrated at the exit and entry ramps that in the long term might have serious consequences for bus accessibility. All the involved agencies are monitoring the situation and Oslo's authorities consider that restrictions for EVs to access the bus lanes should be considered only when it becomes a major problem for the buses.

Burden on ferry operators

As part of the incentives to promote EV adoption, plug-in electric vehicles are exempted from payment of ferryboat fees, but only the car crosses for free, the driver and each passenger pay the ordinary fare. The accelerated growth of electric cars on some ferry routes has caused complaints from ferryboat operators due to the increasing loss on their farebox revenues. According to FosenNamsos Sea AS, an operator with four ferry lines servicing Hordaland county, during the first seven months of 2014 the number of electric vehicles riding the service Krokeidet-Hufthamar from Hordaland increased by 215% compared to the same period last year, for a total of 9,226 electric cars not paying the ferry fee through the end of July. The company argues that "no one could foresee the tremendous growth of electric cars we see on some ferry routes, but the Austevoll satellite connection involves a significant loss of revenue for us."

On 1 June 2014, the company's home county of Sør-Trøndelag repealed the payment exemption for electric vehicles on the county ferries. The company has also requested to Transport of Hordaland a similar end of the exemption or some form of the income loss compensation. FosenNamsos Sea AS has argued that the financial burden should be on the government not the ferry operators. As of 1 September 2014, the county of Hordaland had 5,016 registered electric cars, the second largest in Norway after Oslo. Hordaland transport authorities are studying the request but already have stated that the agency must follow state regulations for ferry rates and the regulations established for electric cars.

Unfairness of free parking

As an incentive to promote EV adoption, plug-in electric vehicles are exempted from public parking fees. Politicians in Trondheim, in Sør-Trøndelag county are complaining about the lack of parking spaces for owners of conventional cars due to preference to electric cars. The city has a five-hour time limit for electric cars to use street parking for free, but electric car owners who use their car to commute keep moving their cars during the day and end up having free parking all day while they are at work. A city council member noted that in many streets there are large numbers of plug-in electric vehicles parked all day, and sometimes there are more electric cars than regular cars. This situation makes it difficult to find parking for those who come to the city to shop. In addition, the municipality of Trondheim is losing revenue. The city councillor wants to end the incentives electric car owners have to park downtown Trondheim all day long for free.

Charging infrastructure

As of March 2016, there were in the country 7,632 electric recharge points. The county with the most stations is Oslo with 1,996 points, followed by Akershus with 1,117, and Hordaland with 932.

As of December 2019, a total 13,687 public charging points were available in Norway, up from 10,711 in 2018. Of these, 770 were fast charging points at Tesla supercharger stations, 1,487 were CHAdeMO quick charging points, and 1,592 were CCS 50 kW+. By early 2020, the counties with the most quick chargers were Viken (198 Tesla and 388 CHAdeMO/CCS), Vestland (128 Tesla and 290 CHAdeMO/CCS), and Innlandet (128 Tesla and 173 CHAdeMO/CCS). Oslo has 118 CHAdeMO/CCS (none Tesla).

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