New Tax Break Could Power EV Sales Surge in Norway

Norway’s position as a leading market for electric vehicles becomes a near-certainty as its government wins European regulatory approval for removing a 25% sales tax on EVs.

The green light comes from the European Free Trade Association Surveillance Authority, which acts as a watchdog ensuring Norway and other member countries comply with European Union law.

As part of the European Economic Area, Norway is committed to following EU laws on limiting the subsidies and tax breaks it can give to certain industries. In this instance, following an inquiry, the EFTA authority concluded Norway’s tax break was legal under EU rules.

The Scandinavian country’s EV segment will be happy. Approximately 53,000 EVs are on the road in Norway – two in every 100 vehicles – and there is more than one for every 100 people (its population is 5 million). In addition, 20.4% of new vehicles sold in Norway are EVs, says the Norwegian Electric Vehicle Assn., and models such as the Tesla Model S, Nissan Leaf and Volkswagen e-Golf regularly top monthly sales charts.

EVs also are exempt from the penalty import taxes applied to fuel-based cars, varied by weight, engine size and emissions. They are allowed to use bus lanes, can be parked at reduced rates and are exempt from the tolls charged on vehicles driving into the capital, Oslo.

Petter Haugneland, communications manager for the Norwegian Electric Vehicle Assn., says: “The zero tax for zero-emission cars in Norway makes the EVs competitive in purchase price compared to a similar petrol (gasoline) car. Price is most important for car buyers, something the Norwegian case shows.”

But he stresses the tax breaks should not be taken for granted by the industry – or by consumers.

“The incentives are temporary to help a new zero-emissions technology to enter the market,” Haugneland says. “We think that the EVs will be competitive in price and range in just a few years when you see the current developments in the market.”

“The EFTA decision is welcome and it will help all over Europe, I think,” says Ole Henrik Hannesdahl, a former spokesman for Norway EV-promotion organization Gronn Bil (“Green Car”) and now managing director of charging provider Gronn Kontakt.

“For us it’s simple – you have to make EV cars cheaper than their petrol equivalents,” Hannesdahl tells WardsAuto. “If you then add on the cheaper running costs, it becomes a no-brainer for the consumer.”

There’s That Range Anxiety Bugaboo Again

Last year saw a surge in Norway sales of EVs to 53,284 from 20,369. Most were imported cars; Nissan, VW, Tesla, Mitsubishi and BMW all make EVs sold in Norway.

But the nightmare of running out of battery power weighs heavily still in sparsely populated Norway, whose coastline (minus fjords and bays) is 1,550 miles (2,500 km) long.

“Your most important charging point is your own garage,” Hannesdahl says. “There is always a market where people can buy an EV car without a single public charging point. If you’re just driving around town, you’re not going to run out of battery.

“Of course this changes as the market develops and the charging network has to grow to keep pace. But I get very frustrated with my colleagues in other markets who say it’s all about charging.”

There are 6,000 charging points in Norway. Some are being upgraded to fast-charging units such as CHAdeMO, which can charge some EVs in less than half an hour.

Manufacturer estimates of battery range invariably are too high, claims EV Norway, an electric-vehicle web portal. Batteries use more electricity in the cold, or on uneven terrain. The freedom to use bus lanes has caused congestion and drivers of conventionally fueled vehicles complain about not being able to park because of the reduced rates for EVs.

But there are fears that a removal of tax breaks, estimated by Gronn Bil to be worth $3,336 per car per year, could cripple demand and collapse this burgeoning market.

EVs use hydropower, thus helping Norway reduce its carbon-dioxide emissions. EU and EEA countries must cut vehicle CO2 emissions to 95 g/km 2020.

Norway is aiming for 85g/km. “Nudging consumers to buy low-emission cars will be the key to achieving the target,” according to EV Norway.