Norway's Electric Bet

Northern lights – Green Aurora borealis over Alesund, Norway
How long can Norway keep its green wave going? Source: Getty

Norway, land of fjords, fish and forests, is bidding diesel farewell as its citizens flock to buy electric cars without even the lure of a subsidy.

While Germany is a trailblazer in sustainability, its Scandinavian neighbor is becoming even greener. Norway is putting electric vehicles onto roads faster than any other country after parties agreed to ban the sale of gas-powered cars by 2025. Now, Oslo has fans including Elon Musk, and governments and industry experts are watching the transition with interest.

Right now, 5 percent of cars on Norway’s roads are electric. That’s 100,000 vehicles, twice as many as total in Germany, where lawmakers acknowledged earlier this year it will be impossible to put 1 million electric cars on the roads by 2020.

For drivers, the changeover is proving easier than expected. “I never would have thought I’d adjust so well,” said Oslo taxi driver Magne Skorven, who spent his working life behind the wheel of a Mercedes E Class and now drives a Nissan Leaf, an electric hatchback. His customers like the quiet ride, and charging the battery is no big deal, thanks to a daily trip to a rapid-charging station.

Norway doesn’t provide incentives like Germany’s buyer subsidies but instead slaps an 85 percent tax on cars with conventional engines, making a BMW 3 Series as costly as a Tesla Model S. This made the Nissan Leaf Norway’s best-selling car last year. There are perks, though: Electric cars can park free of charge, use bus lanes and are exempt from highway tolls.

Norway’s success puts it at the vanguard of climate protection: Its average emission for new cars is 75 grams of CO2, way below the goal of 95 grams the European Union set for itself for 2021. Germany’s average is still above 120 grams.

You could say it is easier for Norway to go green: 70 percent of the country’s electricity is generated by renewables, thanks to hydropower plants on fjords and waterfalls. They churn out 31.7 gigawatts of hydroelectric power, sufficient to power all the country’s electric cars and then some. It means Norwegian e-cars are greener than Germany’s, which are run on electricity from coal-fired power plants.

A dense network of charging stations has helped the switch to electric: Oslo has 400 charging stations with 800 charge points, and there are 7,000 more across Norway, which has 5.3 million inhabitants. Drivers pay €3 or $3.47 to power up their car overnight. That’s about as many recharging stations as Germany has for a population of 82 million.

Now, demand is growing for more electric car models as drivers can presently only choose between the Nissan e-NV200 van and the Nissan Leaf. Norwegians would like to see more options, from station wagons to SUVs, but the country depends on imports.

This green wave does not come cheap: The lack of a sales tax on electric cars leaves a €420 million hole in the annual budget. Politicians worry about whether the policy is sustainable. “We can’t continue to subsidize an artificial market forever,” Liberal politician Ola Elvestuen said.

Privileges and tax benefits are likely to be gradually scaled back as market share increases, but in Denmark sales dropped dramatically after subsidies for electric cars were removed. Some 80 percent of Norwegians say the tax advantages swayed their decision to buy an electric car. Time will tell how green the Scandinavian model proves and whether it can stay in the green fast lane.


Lukas Bay covers companies and markets for Handelsblatt. To contact the author:

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