Electric vehicles: A Case Study of Norway

ECONOMY/ GOVERNANCE/ INTERNATIONAL

Topic: General Studies 2:

• Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
• Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. 

Electric vehicles: A Case Study of Norway

Context: In 2020, Norway further cemented its position as a world leader in renewable technologies, as battery electric vehicles (BEVs) made up more than half of all vehicles sold in the country during the year

Statistics of auto market in Norway

• In 2020, the market share of battery electric vehicles (BEVs) rose to 54%, up from 42% in 2019.
• Only a decade ago, BEVs made up just 1 per cent of the overall market.
• If hybrid vehicles are included, the share of electric vehicles sold in 2020 is 83 per cent. 
• Petrol and diesel cars sold, which commanded a 71 per cent market share in 2015, are now at 17 per cent.
• There are 2.8m vehicles on Norway’s roads and more than 260,000 are fully electric, nearly 9% of the total car stock.

How Norway became an electric vehicles pioneer?

• Contradiction: Norway, which is the biggest producer of crude oil in Western Europe, has in the recent past made a shift from fossil fuels to renewable energy. 
• Early Start in 1990s itself: A country roughly the size of Maharashtra in terms of area, it began the electric push in the 1990s in an effort to cut pollution, congestion, and noise in urban centres.
• Ambitious Target: In 2017, Norway’s parliament set a non-binding goal to ensure that all cars sold should be zero emissions by 2025. The UK and Germany plan to do this by 2030, and France by 2040. In India, the government has set a target of 30 per cent vehicles becoming EV by 2030
• Reduced taxes: Norway has some of the highest taxes in the world on what it regards as luxury goods, which includes cars. So reduced taxes on electric vehicles, with numerous incentives, is bound to entice car buyers. 
• Incentives: The government lets electric cars run on bus lanes, while toll roads are free for them. Also, Parking lots offer a free charge for electric vehicles.
• Charging Infrastructure: New charging stations are continuously being built on the nation’s highways — a mix of regular charging stations and fast-chargers. At the moment, Norway has 10,000 publicly available charging points.
• Policy Tweaks: The country’s policies have also encouraged carmakers to use Norway as a testing ground. As per the CNN report, Volkswagen’s luxury brand Audi was the market leader in 2020, selling 9,227 units of its e-tron model, followed by Tesla’s Model 3, which sold 7,77o units.
• Blessed with Natural resource: While Norway is still one of the world’s big oil producers, it gets more than 90% of its power from hydroelectric sources. This goes some way to explain why the introduction of electric vehicles has been such a winner: as long as the rivers and waterfalls don’t run dry, this is an infinite source of power that can also be applied to vehicles. 

Challenges Ahead

• Dependence on Imports: The country does not manufacture cars (with the exception of a Norwegian city electric car called Buddy produced by a homegrown firm Buddy Electric) and pretty much all of its vehicle fleet is imported.
• Climate Footprint: Although BEVs are environmentally friendly in a local context, globally they still leave big climate footprint. The manufacture of BEV batteries requires expensive and rare metals, while the secure disposal of used and broken batteries is a problem. 
• Burden on Developing Countries: Concerns of disposal of used & broken batteries are conveniently palmed off on poor, vulnerable countries – such as the Democratic Republic of Congo, which produces 60% of the world’s Cobalt – that lack the legislation to deal with them.
• Difficult to Replicate: Norway’s policies are difficult to replicate in other parts of the world, mainly because the country can offer generous subsidies thanks to its revenues from oil and gas production. Thanks to its hydrocarbon wealth, Norway has been able to build the world’s largest sovereign wealth fund, currently valued at $1.3 trillion.