The Future of Cars is Here in Norway

William Morrison developed the first electric car in the United States in 1890-1891. The six-passenger vehicle could only reach 23 kilometers per hour. That’s pretty slow, right? And perhaps the reason the world shifted to gasoline and diesel engine vehicles. Fast forward in the 21st century, the world is struggling to get back to Morrison’s time. Not like we are trying to prove that indeed history tends to repeat itself—it’s the unsustainability of gasoline and diesel cars pushing us there, and Norway is taking the lead.

According to the US Environmental Protection Agency’s (EPA) 2019 report, the transport sector contributes the most significant percentage of greenhouse gas emissions (GHG). More than 90% of the energy used in the sector is based on petroleum and is purely gasoline and diesel. In response, countries are making concerted efforts to reduce their GHG emissions as part of the global environmental sustainability goals.

While Americans remain a little skeptical about a complete phasing out of conventional fuel vehicles, Norwegians are already living in the future. The country hit a milestone in 2021 when reports came out that only 8% of vehicles sold in the country run gasoline and diesel. Two-thirds of the cars selling in Norway are electric, while the rest are hybrids of conventional gasoline and electric cars.

However, these latest reports are not quite surprising, although remarkable. Norway has for many years been leading the world in the shift from traditional cars. While most markets intend to transition from gasoline vehicles by 2030 to 2035, Norway intends to have electric cars by 2025.

How Did Norwegians Do It?

While Americans and other countries perceive Norwegians as environmental die-hards who were so much eager to transition to electric cars, Norwegian transportation experts reveal otherwise. For instance, the Norwegian Electric Vehicles (EV) Association secretary, Christina Bu, revealed that the speed with which Norway transitioned surprised many. Still, they also started with the same skepticism of the Americans and other countries.

However, the situation changed fast due to new government policies that pointed out the wins from the shift and the rise in the number of attractive electric vehicles in Norway. Therefore, it’s not that Norwegians are more environmentally conscious or have more suitable conditions, but the demand-side policies that the government set in place consistently over the years.

The government imposes heavy taxes on the sale of environmental pollutant vehicles and fails to levy electric vehicles. As a result, electric vehicles have become a better option for Norwegians, despite having higher production costs. Excise duty is also quite high in Norway, which further accelerates the need for Norwegians to shift to electric vehicles. Further, Norwegians who have electric cars got exempted from specific parking and toll fees.

Car companies also had a role to play in the remarkable Norway shift. As more electric vehicles got on the roads, it became viable to build charging stations, and car companies leveraged the need. They dedicated much of their marketing to electric cars and even manufactured more models with varying features and prices. Finally, the country’s parliament resolved to have zero-emission car sales by 2025.

Will the Rest of the World Follow Suit?

Not like other countries are not interested in environmental sustainability. There are already international restrictions for car manufacturers which also partly helped Norway. A global rollout has started following these restrictions, and steps like the development of charging infrastructure began. For instance, US president Joe Biden’s infrastructure bill sets aside $7.5 billion dedicated for developing a charging network in all US states.

The US is also growing in electric car sales, but much slower than other large economies. It is around 3% for passenger vehicles. With such steps as the ones taken by the president, it could go as further as any other country, especially when they implement demand-side policies.

However, Norwegian Planning and Engineering Consultant Anders Hartmann says that such policies are not easy to implement in Norway or other countries. Hartmann argues that some policies may be difficult to sustain at some point. The consultant notes that policies like skipping parking and toll fees were manageable when just a few electric cars were on the road.

As the number of cars increases, several local governments miss out on the income they use to finance public transportation. Therefore, the tax breaks could be scaled back, although it’s kind of a challenge since they are already quite popular in Norway.

Even though demand-side policies are a little difficult to implement, the US and other countries can use a different approach. For instance, they can introduce new sales taxes on car models with the highest emissions. The proceeds from these taxes can then get channeled to subsidizing electric vehicles.

Such an approach provides a fair means of implementing environmental policies targeting new car buyers rather than imposing additional taxes on gas. Car buyers can have the option of buying hybrid models with lower emissions or subsidized electric vehicles. Although hybrid models have been pointed out in Norway as hindrances to full transition, they are a great transitional technology, given that the EV market is not quite mature yet.

Also, governments should acknowledge that these tax policies alone are not enough to achieve the overall goal. Additional steps like lower road tolls and reduced public parking fees for those driving electric cars can effectively accelerate the shift.

Final Word

Indeed, countries have varying tax systems, and some may not be ideal for incentivizing EV. For instance, taxes to discourage a certain behavior are not popular in America. The US government may find alternative approaches like the already implemented tax breaks for specific EVs.

On the other hand, some countries like New Zealand, the UK, Germany, and Sweden already see positive results from the tax policies. For some of them, the electric vehicle transition is faster than in Norway. It took Norway two and a half years to move from an EV market share of 2% to 10%, a fete that Germany achieved in a year. The UK also recorded similar results in one and a half years, proving that conventional gasoline and diesel vehicles are an endangered species.