How the Norwegian government started an electric car boom

OSLO, Norway – In this capital city, Teslas line the streets.

They glide in a silent, steady stream through the city, glossy and sleek against Oslo’s dull gray cobblestone streets.

While the Model S of the American luxury electric car, which does not emit any carbon emissions, has failed to gain broad traction in the U.S., it is one of the best-selling cars in this Scandinavian country. But Norwegians dismiss the idea that they simply care more about the environment than Americans do – that they are unilaterally more attuned to climate change.

“Capitalism works, perfectly, when you have the right incentives,” said Jens Frølich Holte, a political advisor to the Norwegian Minister of Climate and Energy. “We use very, very strong economic incentives to stimulate the amount of zero emissions vehicles.”

He nodded with satisfaction.

“Economics work.”

Through a combination of tax exemptions and other economic incentives, the Norwegian government has created an electric car boom, making Teslas and other electric cars cost less than half of comparable gas-powered cars.

Electric cars owners do not pay the 25 percent value added tax that gas and diesel cars face. They pay significantly lower annual car fees, too, according to Morten Anker, Director Deputy General at Norway’s Ministry of Oil and Gas.

Beyond these up-front savings, the monetary perks of ownership lie at every street corner.

Electric car owners can park their cars for free in Norway’s cities, and do not have to pay on toll roads. They can charge their cars for free at public charging stations, and drive their cars onto the ferries that run between the country’s islands at no cost. On many roads, electric cars are allowed to bypass traffic and drive in the lanes usually reserved for buses.

“Now, the buses meet a queue of electric cars,” Anker said.

Nearly one in every five cars registered in Norway is electric – not only Teslas, but also Volkswagens, Nissans, Kias, and more. And their numbers are only growing. Meanwhile, in the U.S. sales of electric cars hovered around 1 percent.

The Tesla Model S was first introduced to the United States in 2012. (Photo via Wikimedia Commons)
The Tesla Model S was first introduced to the United States in 2012. (Photo via Wikimedia Commons)

The success of the program is at odds with Norway’s production of oil, showing how powerful incentives can be. The Scandinavian country is the fourth largest exporter of oil and natural gas in the world; the oil and gas market makes up around a fifth of its G.D.P. “Norway is a paradox nation,” said Holte, the government advisor.

To power the electricity for its auto fleet, the government has turned to another of its natural resources. Water floods through fjords throughout the country, a happy geologic accident that makes electricity in Norway both abundant and inexpensive. Today, hydropower generates 98 percent of Norway’s electricity.

But concerns have mounted that, perhaps, the government-led incentive program for electric vehicles is far from sustainable.

The plan, originally, had been to roll back the exemptions when the country registered 50,000 electric cars. This February, Norway hit 75,000.

Anker said that he knows of no precise, agreed-upon time when the exemptions will be phased out. But the revenue lost in tolls, parking, fees, taxes, and more are putting pressure on the Norwegian government to act.

Anker warns that, if they peel back the exemptions, there may be little tying Norwegians to continue investing in electromobility.

“I don’t think that there is any big part of the Norwegian population that is very ideologic towards electric cars,” Anker said.

In the meantime, until the government acts, Teslas will continue to fill the streets.