A Tesla electric car in Son, Norway. Photo: Sigrid Harms/picture alliance via Getty Images
The demand for electric vehicles (EVs) in Norway — which accounted for nearly one-third of all new cars sold in the country in 2018 — has exceeded their supply, with some consumers having to wait until 2020 or beyond to get their EV of choice. Prices for used models of the most popular EVs are also seeing an uptick.
Why it matters: In a 2016 study, only 4% of Norwegian EV owners indicated that they might go back to internal combustion engine vehicles (ICEVs) in the future. The experience seems to prove what was observed in the case of the transition to smartphones: Once users adjust to newer technology — even at significantly higher costs — they don’t want to go back.
Background: Because renewable energy already accounts for an 98% of its electricity mix, Norway has tried to decarbonize further by focusing on other sectors, including road transportation, which produces about 17% of the country's carbon emissions.
Efforts started in the '90s with incentives for zero-emission vehicles in the form of tax breaks, parking-related subsidies, access to public transport lanes, toll roads, and ferries. EVs started to make greater inroads into the Norwegian market in 2012–2013, when larger EVs with longer driving ranges were introduced, thereby addressing consumers’ range-anxiety concerns. The introduction of Tesla’s Model S in particular switched things to a different gear.
- A key enabler was Norway’s very high standard taxes for ICEVs, ranging from approximately 20% to 40% depending on the weight of the car and estimated emissions. The various subsidies stacked together along with this avoided tax chipped away at the incremental cost of an EV compared to a conventional ICEV.
- The development of a public charging infrastructure further allayed the range anxiety of consumers.
The bottom line: The Norwegian experience with EVs seems to indicate four key takeaways: EVs become the preferred choice of most consumers once they try them; range anxiety can be addressed; the electricity grid was able to absorb the additional demand for electricity in the short run; and perhaps most important, temporary subsidies and incentives can kickstart the adoption of new green technology.
Magnus Korpaas is a professor at Norwegian University of Science and Technology. Apurba Sakti is a research scientist at the MIT Energy Initiative. The opinions expressed in this article are solely those of the authors.