Norway has worked hard to encourage EV adoption. Now the UK is following its lead.

Norway’s Generous Electric Car Incentives To Ramp Down by 2020

Since 2011, the Scandinavian nation of Norway has been the world-leader in per-capita electric car adoption, lead by a generous package of incentives that make owning an electric car both cheaper and more convenient for a large number of Norwegians. The incentive package, which includes exemption from both sales tax and licence fees, permission to drive in bus lanes and free parking and charging in most of Norway’s cities, has seen electric car sales in Norway blossom over the past four years, with nearly one in five new cars being powered by electricity.

The incentives were put into effect by Norway’s government to help it put 50,000 electric cars on the nation’s roads by 2017, but last month that target was met, two years ahead of schedule, prompting many to ask what would happen next.

With 50,000 electric cars in Norway, the sun is due to set on incentives by 2020

With 50,000 electric cars in Norway, the sun is due to set on incentives by 2020

When we covered the important 50,000-car milestone last month, we posited that Norway would likely rescind some of the incentives currently on offer for electric cars, keeping others to ensure that owning and operating an electric car still made more sense than an internal combustion engine vehicle.

Thanks to The Telegraph, we’ve now learned that’s essentially what Norway’s government has agreed to do come January 1, 2018, gradually ramping down incentives completely by 2020.

By January 2020, all electric car incentives will come to an end in Norway.

Working together, the right-wing Norwegian government and its centre-right allies have agreed to maintain the status quo for electric car incentives from now until the end of December, 2017. This means anyone buying an electric car in Norway before January 1, 2018 will gain the same tax exemption and free licence as those who purchased an electric car before the 50,000 target was met. Other perks, like free bus-lane use, parking and charging in city centres, will also remain.

On January 1, 2018 however, those buying an electric car in Norway will be required to pay half of the usual yearly road license registration fee. In 2020, that will transition to the full road licence fee paid by non electric car drivers.

Electric cars, new and old, can be seen charging on Oslo's streets.

Electric cars, new and old, can be seen charging on Oslo’s streets.

The current VAT exemption on sales of electric cars will also disappear on January 1, 2018, with the potential for a credit-based or grant-based replacement that entitles those who buy an electric car a subsidy or discount instead of VAT exemption. The advantage of this over a flat VAT exemption is that it could be subject to either an income-based ceiling or a vehicle sticker-price ceiling, meaning incentives could be targeted at those who would most benefit from them rather than those who could afford to pay full list price anyway.

Also worthy of note is the decision of the Norwegian Government to pass control of parking and charging perks, as well as bus lane use, to individual local authorities. Instead of a blanket national policy, cities and towns will be able to decide if they want to allow electric cars to continue using their bus lanes and park for free — or if these policies should be rescinded.

With Oslo and other busy cities already straining under the numbers of electric cars in the bus lanes, this could lead to some controversial policies as cities fed up with congested bus lanes decide to force electric cars back onto the main carriageway instead.

For the rest of the world too, Norway’s changing policies on electric cars could prove to be the case study for other nations to follow as electric car adoption rates continue to rise.

Is Norway right to end what has been an expensive subsidy program now that it has more than 50,000 electric cars on the road? Is it ending them too soon? And will there be a gradual decrease in electric cars with the incentives gone — or has Norway reached a tipping point that ensures that electric cars are here to stay?

Leave your thoughts in the Comments below.



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  • Martin

    I think with over two and a half years to go there are still going to be a lot more EVs in Norway and likely to be a surge towards the end of 2017

  • Søren Bernt

    what they have essentially done, is take the Total Cost of Ownership, and drive it below the TCO of ICE vehicles, even when taking the uncertainty of depreciation and batterywear into consideration. Looking to Denmark, who has chosen some of the same incentives, but just not to the same extent, we see a total number of EVs bordering 3.700, which is still respectable (1% of all vehicles sold in 2014) but still too high risk for the private consumer. 85% of sales in Denmark is to municipalities and large fleet operators like Avis (900 EVs). I think that incentives needs to focus on TCO, not convenience.

    Luckily a lot of the uncertainty regarding expenses for EVs are fading away as the 3rd generation EVs have proven to be even more reliable than expected. which means that incentives can be scaled down while still stimulating desired behaviour.

    @Nikki: actually the nordic region (Denmark, Finland, Sweden, and Norway) presents a very interesting case study in how different incentives stimulate different behaviour. Maybe a subject for a future article?

  • Disqusor

    Yes, in small steps,Year by Year.

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