Three reasons behind the explosion in electric car sales in Norway
Europe’s largest gas producer and global champion of carbon-free mobility. Here is a nice list of achievements for Norway. Almost 80% of new cars registered in 2022 will be electric, according to figures published by the Road Traffic Information Council on Tuesday. The country, which is the world champion for zero-emission cars, has renewed its record in 2021 (64.5%). The result: one in five cars on Norwegian roads today is fully electric, another world record.
For example, it contrasts with the performance observed in France, which has only 13% of electric cars among the new car fleet registered in 2022. But what is Norway’s secret? And why doesn’t France follow its example?
Also read: 80% of new cars in Norway, 13% in France are electric
Strong tax incentive
The first explanation for the success of Norwegians’ all-electric conversion is due to the decision of successive governments to heavily subsidize the purchase of electric vehicles. Norway has also set very ambitious goals: all its new cars will be zero-emissions (electric or hydrogen) by 2025, 10 years ahead of the European Union’s targets. To overcome this problem, the country has doubled down on incentives to drive electric vehicles: exemption from all taxes, including VAT, reduced or even free fares on city ferries and parking in public car parks. Electric car drivers have been able to take over bus lanes for years to further entice Norwegians to zero-emission vehicles. As a result, the shortfall in tax revenue for the Norwegian state in 2022 was estimated at around 40 billion kroner (3.8 billion euros). “The sums at stake are much larger than in France “says Mikaël Le Mouëllic, deputy director of the Boston Consulting Group and specialist in the automotive sector. In comparison, In 2020, the National Federation of Transport Users Associations (Fnaut) estimates the amount paid by the French state to help buy an electric car at 700 million euros.
However, this policy appears to be slow in car purchases. Because in March 2020, it took almost a decade for the share of electric vehicles in the Norwegian car fleet to increase from 0 to 10%. After this slow acceptance period, things suddenly picked up. Then, the share of electric energy in vehicles in circulation increased from 10% to 20% between 2020 and 2023. It should be recalled that, according to the Ministry of Transport, this rate in France barely reached 1% in October 2021. ” They have economic consistency for 20 years, tax exemptions at charging stations, highway privileges. Over time, this sequence had a powerful effect » Estimates Guillaume Crunelle, Deloitte consultant, specialist in the automotive sector.
And all these years, this very aggressive policy has met with almost no resistance since then “The country has no thermal car heritage to defend “, the expert adds. On the contrary, France, like many European countries, was unable to implement an aggressive policy like the Nordic country, fearing the destabilization of its national manufacturers and having to close thermal car plants and lay off a large number of workers.
Wealthy population who can afford new electric cars
A second explanation for Norway’s success in going fully electric can be found in the purchasing power of Nordic residents. ” It is a country with large incomes. GDP per capita in Norway is $80,000 compared to $35,000 in France. “Guillaume Crunelle recalls. Better purchasing power, which allows many Norwegians to invest in a new and electric vehicle, which is generally more expensive than a second-hand thermal car.
The purchasing power of Nordic motorists is also visible in their choice of vehicles. In 2022, 12.2% of the total sales of new passenger cars in the country were Tesla cars. High-end and expensive cars (over 50,000 euros) allow motorists to travel long distances in a country of 385,000 km2.
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A simpler network of charging stations in Norway
The possibility of being able to travel around the country without running out of electricity is considered as the third winning argument for the population.
” In Norway you can cross the whole country in one go with a car with 350 km of autonomy, while in France you need to charge 2 or 3 times to do Paris Marseille. “, analyzes Michaël Le Mouëllic.
Convenience for car drivers is emphasized by the density of charging stations in the country. Norway has 17,000 terminals for a population of 5.5 million, while France has 77,000 for a population of 67 million. But above all, what reassures Norwegians is the arrangement of these terminals. ” In the south, where most of the population lives, people charge their cars at home. But the northern two-thirds of the country is well covered with terminals to meet the needs of travelers “, indicating a director associated with BCG.
This good network of terminals, which would be difficult to achieve in France, finally satisfied the Scandinavians.
Norway focuses on small cars
After converting its population entirely to electric power, the Norwegian government now wants to encourage them to buy smaller, less polluting cars. So, starting from January 1, when buying a new electric car, VAT exemption (at the rate of 25%) is only available for the purchase price of 500,000 kroner (46,000 euros), amounts above this ceiling, expensive and larger vehicles are taxed. Finally, the tax on new vehicles was changed to take their weight into account and also applied to electric models.