Thousands of Norwegians are currently waiting for their new electric car as car sellers cannot keep up with the surge in demand. This highlights both the success and the risks of the rapid electrification of Norway’s car fleet, write Steffen Kallbekken, Håkon Sælen, Erlend Hermansen and Elisabeth Lannoo of the CICERO Center for International Climate Research. They discuss the lessons the EU, currently reviewing the Clean Vehicles Directive, can learn from the Norwegian experience.
Norway is the country with the highest number of electric cars per capita in the world. Currently, one out of every five new cars sold is electric, and more than 50% of new cars sold in 2017 were electric or plug-in hybrids.
Strong incentives
Driven by generous tax breaks (carrot) and increasing road tolls (stick), demand for EVs has been rising rapidly. As a result of these tax breaks, electric cars can be sold at the same price as fossil fuel vehicles. EVs, however, are considerably cheaper to run.
A calculation by our institute shows that, for example, an e-Golf reduces total running costs (excluding insurance, depreciation and parking) by around 75% compared to its diesel equivalent, for someone driving through an Oslo toll station twice daily.
This makes it attractive for Norwegian consumers to replace their diesel or petrol cars by electric ones. A recent poll showed that nearly half of the people who are planning to buy a new car in 2018, want a chargeable one.
In fact, the demand for electric cars in Norway is currently growing so rapidly that car producers cannot keep up with it. Thousands of Norwegians have been waiting for months for their new EVs and car sellers have repeatedly extended delivery dates.
Norwegian consumers are willing to pay considerably more for cars with lower running costs
The current waiting time for existing models like Volkswagen e-Golf, Hyundai Ioniq and Opel Ampera-e is between eight months and two years. Meanwhile, thousands have paid to be put on a waiting list for new models by Nissan, Tesla, Audi and Jaguar which will be launched in the coming months and years.
A recent survey among Norwegian consumers, which we ran as part of an EU-funded research project on energy efficiency (CONSEED), shows that Norwegian consumers are willing to pay considerably more for cars with lower running costs.
Yet what happens if supply does not meet demand, for various reasons? The delays risk putting off consumers buying energy-efficient products.
Climate goals
Moreover, delays in electric car production also put Norway’s and the EU’s climate targets at risk. Under the Paris Agreement, Norway pledged to reduce its greenhouse gas emissions by 40% by 2030, relative to 1990 levels. How Norway will meet this target outside the emissions-trading sectors is currently still a matter of negotiations with the EU.
Transport is certainly the most important sector in Norway’s climate efforts. Emissions from transport have risen since 2005. In order to fulfil the Paris pledge, emissions will need be to cut by half by 2030. The Parliament has set an indicative target that all new passenger vehicles sold by 2025 should be emissions-free.
While electric car sales in Norway are far ahead of most other European countries, they are only just keeping up with the Norwegian Environment Agency’s projections and are far behind projections from the independent Institute for Transport Economics.
Supply will need to increase manifold over the coming years if Norway wants to meet its vehicle and climate targets
The institute has estimated that Norway needs around 65,000 new electric vehicles on the road in 2018 alone to hit the 2025-target, which is close to twice the number of EVs sold in 2017. Supply will need to increase manifold over the coming years if Norway wants to meet its vehicle and climate targets.
The current waiting lists for new electric vehicles indicate that supply is limiting sales. Being dependent on production abroad, a small country like Norway is vulnerable to marketing decisions by car producers and other market players in the transport sector.
With the European Union currently reviewing the Clean Vehicles Directive, it can learn important lessons from the EV revolution, and its setbacks, in Norway. First, a well-designed policy package of carrots and sticks can drive deployment of energy-efficient technologies faster than expected. Second, policy makers must make sure that car manufacturers actually can deliver – on acceptable timescales – what they offer. The Clean Vehicles Directive would benefit from considering these lessons, and avoid that car manufacturers respond to the directive with EV “window dressing”. If not, the climate and energy targets in the EU may be in peril.
Editor’s Note:
Steffen Kallbekken is the research director of the CICERO Center for International Climate Research. Håkon Sælen and Erlend Hermansen are senior researchers, Elisabeth Lannoo is a senior communication advisor of the same organization.
[adrotate banner=”78″]
Helmut Frik says
Well, as I could read waiting times in germany also become longer and longer. Which means that car produces will ramp up the production, and keep prices on a level where they will earn money. The later is the important point, because it maes sure they will ramp up the production continuously.
Nigel West says
Germany will have plenty of spare car production capacity if the EU maintains protectionist regulations that are designed to impede US imports of goods. The US will respond by raising imports duties on German cars to 10%. Similarly, German car makers will find its key European market the UK will import far less of their cars if Brussels messes up trade negotiations. Brussels will lose if it tries to push the UK and US around which will hurt Germany manufacturers.
Helmut Frik says
Usually German car manufacturer produce the cars mainly sold in the US directly in the US. And about Brexit – it’s Westminster which follows the “wash my fur but don’t make me wet” approach which leads nowhere. But it’s nice to hear how much you hate Germany.
Nigel West says
Helmut, yes BMW and VW have factories in the US. But they are assembly plants with many of the parts shipped in from Europe. More expensive cars like Porsche are imported as complete cars.
I regret having given you the impression with some of my posts that I hate Germany. That’s not the case, even though I don’t like Germany’s energy policy. Britain and Germany has much in common as you know and we share a common view on how to run businesses and commerce. I think football can polarise views when our two teams play each other, but I am not interested in that game. Being an engineer, I like quality goods and good engineering which Germany excels in. I drive a German car, have a German gas boiler and German kitchen appliances.
I really hope Brussels gets out of the way and Germany and the UK are able to continue trading freely.
Grant Hendricks says
Interesting, German automakers will save the day with lots of EV’s.
I hope so. Tesla financially was helped at the beginning, as a German company saw their battery packs as an advantage.
I saw a youtube video of Elon Musk in Germany marketing EV cars. He was told, they are too expensive to build, and market to Germans.
Alkè says
This is so true. Norway seems to be the only Country in the world caring about climate change and environment. This is not because norwegian are better than other people, but becuse norwegian governmet came out with incentives and infrastructurs for the electric mobility. Now it’s time for all other european countries to do the same!
Grant Hendricks says
Hi, Alke
Norway, if fortunate your government set up a trust for all Norwegians and can afford gracious EV incentives, like tax free, free electric chargers, free ferry, with privileged downtown parking.
Here in Canada, Premiere Ford cancelled $14,000 rebate and charging stations in Ontario. He represents our Government view of EV as unnecessary.
Canada is 20th in the world in EV sales, and aiming, to be last.