Will Norway eventually cut its taxes?

The electric car wonder of Norway

In 1995, the lead singer of the 80s band A-ha and the head of the Norwegian environmental group Bellona climbed into a converted electric Fiat Panda that they had imported from Switzerland and went on a road trip. They drove around Oslo, refused to pay the city's horrific toll, parked illegally wherever they could, and ignored any penalty orders they were given. In the end, the authorities confiscated her car and auctioned it off to cover the fines that had been accrued in the meantime.

However, the action received a lot of media attention and public discussion about it reached politics. The result: Electric vehicles were soon exempt from road tolls. It was the first of many other incentives that would follow over the years to make Norway the country with the highest density of electric cars in relation to its population in the world.

60 percent of new registrations in Norway are now fully electric cars, and another 15 percent are plug-in hybrids. This means that the bottom line is that three out of four new cars sold are now either fully or partially electric.

The country is thus well on the way to achieving the target set by the government in 2016 of reducing sales of new vehicles with internal combustion engines - passenger cars and light commercial vehicles - to zero by 2025.

"It's amazing how quickly the mindset has changed," said Christina Bu, General Secretary of the Norwegian association "Norsk elbilforening", in which 75,000 owners of electric cars have organized to improve the framework conditions for the drive concept and people for them To win electromobility. “Seven years ago people were still very skeptical about technology. The majority of Norwegians now say: My next car will be an electric vehicle. "

Oil nation relies on electricity

Anyone who sets out to find the explanation for this comes up against a simple, if unexpected, logic. On the one hand there is the fact that Norway is still a large oil and gas producer, but now draws almost all of its energy from a single, renewable source: hydropower. This means that switching to electric mobility is a much more environmentally friendly option for Norway than for countries where most of the electricity is still generated in coal-fired power plants. And it means that if Norway wants to significantly reduce its carbon dioxide emissions, it has little choice but to make its transport sector greener.

The government recognized this early on and acted consistently. As early as 1990, it created the first incentives for the purchase and operation of electric cars by initially exempting them temporarily and then permanently from the vehicle purchase tax, which in Norway can amount to 10,000 euros depending on the weight of the vehicle and the quality of the exhaust gas cleaning can.

Internal combustion engines continue to be taxed heavily

“This was an important step,” said Bu. “Norway was a very poor country before we discovered the oil deposits off the coast. Cars were therefore a luxury item. They were always taxed very heavily. Cars are still significantly more expensive in Norway than elsewhere. But without the acquisition tax, the acquisition costs for an electric car would have fallen to the level of a conventionally powered car.

And it did not stop with the abolition of the purchase tax. The value added tax on the purchase of the cars was soon eliminated. On top of that, drivers of electric cars were given the right to park for free in some city parking lots and to use bus lanes. The ferries are free for electric cars. And thanks to A-ha, they don't have to pay a road toll either. In addition, commercially used electric cars are taxed lower than petrol or diesel.

Some of the funding measures from the beginning have now been reduced. For example, electric cars are only allowed to use the bus lanes in cities today if at least two people are seated in the vehicle. And since 2017, local authorities have had the right to charge owners of electric cars up to half of the parking, road and driving fees that apply to conventionally powered vehicles - there are now so many electric vehicles in the country that the privileges clearly leave their mark Left behind budgets of cities and municipal companies.

Purchase decision "almost imposed"

But overall, says Bu, "the combination of a large one-off savings when buying a car and the significantly lower costs - fuel, tolls, parking fees, maintenance - for driving the car is still a very strong financial argument". Over the course of its life, an electric car in Norway “saves you a lot of money”.

That was surely what convinced Wenche Charlotte Egelund, 57, who bought a VW Golf Electric with her partner two years ago when they moved out of central Oslo. “The incentives were crucial,” she said. "The tax and VAT exemptions, free municipal parking spaces, free toll roads - all things that help us avoid traffic jams during rush hour."

In fact, according to Egelund, the incentives were so substantial that she almost “felt that the decision had been forced on me”. In financial terms, it was like there was no other sensible option. However, I wonder if this option is really as green as we are told. Is a car that runs on clean diesel really more damaging than the environmental impact of producing a high-voltage battery for an electric car?

Diesel car as a second car for long-distance journeys

Postman Rachel Ritman, 56, who lives on the outskirts of Fredrikstad, bought her Opel Ampera two years ago and said she hadn't regretted her choice, even though she was “not sure we would have driven electric without the incentives”. The range of the car is good, she said: 400 kilometers in summer, 320 kilometers in winter. The car is charged almost exclusively at home.

Both Ritman and Egelund, however, have a second, diesel-powered car for particularly long journeys, to country huts in the far north or on vacation. Media consultant Sten Bråthen, 55, also bought his Nissan Leaf as a second car "to drive the children around and get to work". But the Stromer offers so many advantages “that when we got a new main car last year, we didn't think twice about driving electrically”.

Bråthen admits that the government incentives were crucial in the purchase decision: “I think we could have done without the other incentives - free toll roads and parking lots - but the real cost of buying them was so much lower than that of ordinary cars here in Norway". However, he warned that Norway will need significantly more charging stations if the proportion of electric cars continues to rise so strongly.

The dynamic has only hit the market in recent years. Despite the incentives, EV sales in Norway remained low through 2010. That didn't change until a number of smaller, more affordable electric cars came out from manufacturers like Mitsubishi and Nissan. Demand experienced a second boost when, thanks to improved storage technology, larger electric cars came onto the market that were family-friendly in terms of both range and space.

Hidden tax cut for the rich?

E-car activist Bu says the incentives are so diverse that “many people say that when they bought an electric car - from Tesla, Jaguar or Audi - they bought the most expensive car they ever had. Simply because they have calculated how much they will save in the coming years and because they think it makes sense ”.

This has led to allegations that Norway's support for electric vehicles is a hidden tax cut for the rich who are now getting a bigger or a second car. Because many Norwegians with lower incomes can only dream of owning an electric car. And in Norway too, three out of four car purchases are made on the used car market.

Bu - whose organization represents the positions of consumers rather than vehicle manufacturers - rejects this, arguing that “we need to renew the cars we drive today. And the only way to modernize the vehicle fleet is through the new car business. ”She assumes that electric cars will soon make up ten percent of all passenger cars in Norway. And their share in the used car market is also increasing continuously.

Battery manufacture remains a problem

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She says she is confident about the future of electric vehicles - even in countries that still get most of their energy from fossil sources today. Studies have shown that electric cars are no more harmful to the climate than gasoline cars, even when they are operated with electricity obtained from coal or natural gas.

"As a society we clearly have to do two things," she said. "We need to produce more renewable energy and cars that can run on it," she said. “We have to do both, as soon as possible. We can't wait until the electricity comes from 100 percent renewable sources. "

As she admits, electric cars will "never be really environmentally friendly." This is due to the batteries, whose manufacture is "the main problem". Bu: "We need CO2-neutral battery production in Europe".

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