Insights Tag:Norway

Based on figures reported in the latest edition of the International Energy Agency’s (IEA)Global Electric VehiclesOutlook, over one million electric cars were sold around the world in 2017, a new record. The cumulative number of electric and plug-in hybrid cars on the world’s roads is now estimated to be well over 3 million, a 54% increase from 2016.

China remains, by far, the largest electric car market in the world, accounting for half the volume with 580,000 electric cars sold in 2017 – a 72% Y/Y increase. But more definitively, electric cars accounted for 39% of new car sales in Norway, with over 62,000 units sold, making it the world’s leader inelectric vehiclesby market share.

Clearly, there are a few lessons to be learned by other countries from the sustained EV dominance of China and Norway, on how to successfully encourage adoption of new energy vehicles (NEVs) by their citizens.

The China Story

The exponential growth in automobiles experienced byChina创造了一个主要的抵押品环境问题,especially in metro cities Shanghai, Beijing and Guangzhou. While these city governments have already reacted by restricting auto sales to moderate vehicle population growth, the Chinese government has also simultaneously made a big commitment to develop the NEV industry. Focusing on low emissions car development, the government launched the green initiative in a major way in 2009, with 13 cities prioritised to pilot the programme. Since then, there has been no relenting by the government, resulting inChinabecoming the largest EV market in the world in 2016. In fact, investments by EV companies in China are emerging to be some of the largest in the world today in terms of production volumes.

显然,可以主要在中国发展电动汽车attributed to supportive government policy, including public procurement programs, financial incentives; reducing purchase price of EVs significantly, tighter fuel-economy standards, stringent emission regulations, low/zero emission vehicle mandates and a variety of local measures, i.e. restrictions on vehicle usage based on emission performance. The rapid uptake of EVs has also been catalysed through progressive cost reductions and enhanced performance of lithium-ion batteries. In addition, consistent with the anticipated growth, the government has planned ambitious targets for setting-up charging stations to overcome buyers “range anxiety”, a challenge which has long plagued adoption of NEV vehicles. For example, Beijing’s government is currently working on installation of 400,000 charging points across the capital by 2020.

From 2013 to 2017, total subsidies on EVs amounted to about RMB 50 Billion (approx. US$ 7 Billion). Earlier, in February this year, the Chinese government released its latest subsidy scheme, looking to encourage technological upgrades by shifting subsidies to the higher-end models of the EV market. Electric passenger cars will need to meet a minimum driving range of 150 km (previously 100km) or above on a per charge basis to be entitled to this latest subsidy. All buyers ofbatteryEVs, plug-in hybrid electric vehicles and fuel cell vehicles, will continue to enjoy a 10% vehicle tax exemption until 2020. Beijing and Shanghai are providing EV car buyers easier access to car plates and currently there is no restriction on EV usage during peak hours.

However, despite these higher absolute numbers, EV penetration is still low in China and was below 3% in 2017. With the rollout of newer EV models expected through numerous start-ups and international brands – likeTesla– imminently setting up capacity in the future, EV sales in China are expected to reach two million units in 2020 and growing to six million units by 2025. By 2030, China’s EV sales are projected to touch approximately 15 million units, translating to a penetration rate of around 33%.

The Norway Story

Similarly, Norway’s journey also demonstrates how consistent government support for sales of electric vehicles can create and ensure a sustainable market. With focused, well-executed government policies and interventions, along with improved availability of vehicle models in terms of size, comfort and range, EV sales in Norway have steadily accelerated in the past five years.

It all began with a new range of relatively affordable e-cars, the Norwegian built “Think City” introduced in the 1990s, supported through government incentives promoting battery-electric cars. Further, in 2001, a 25 % exemption from the standard value-added tax rate paid on EV purchases, a $1,200 saving off the price of most models, helped electric cars to economically compete on price versus petrol- and diesel-powered cars inNorway. In 2015, the government further removed the 25% VAT charged on leasing EVs, boosting consideration of these alternately powered vehicles further. Taken altogether, these cumulative benefits offered to buyers are undoubtedly the foundation of Norway’s EV success story.

Eventually, while the Norwegian Think City electric vehicle venture didn’t last, the EV government-backed benefits continued, justified by an overall progressive emissions reduction and receive the continued support of most political parties in the country.

Looking ahead, however, if e-car sales continue to pick up in Norway at this rate, the current government could reconsider its policy and look at possibly revising the existing incentive program, should it lose too much revenue. While existing tax breaks will remain unchanged in 2018, they will most likely be reviewed next year. Moreover, drivers in the future will probably no longer benefit from full toll exemptions but will instead pay a relatively lower charge than conventional vehicles, based on their emission performance.

The government has stated that it wants to achieve a goal of ensuring all new passenger vehicles sold in Norway are zero or low emissions by 2025. This target is proposed to be achieved by encouraging buyers through incentives, rather than the outright banning of internal combustion engine (ICE) vehicles, contrasting Norway’s approach, for example, with the French government’s announcement to end sales of petrol and diesel vehicles by 2040. Towards readiness, the Norwegian government is moving forward with installing charging infrastructure, including fast-charging stations, throughout Norway’s extensive rural areas.

Conclusion

Supportive national and local policies, aimed at reducing the overall economics of acquisition and operating costs for citizens, have primarily fuelled the significant growth and adoption of EVs in countries around the world. As per IEA’s projections, which build in current and announced government policies in its estimates, the projected number of electric cars in-use could reach 125 million units by 2030. However, with most countries looking to raise their targets further, to meet more ambitious environmental and sustainability objectives, the number of electric cars on the road could be, optimistically, as high as 220 million by 2030.

Clearly, China’s and Norway’s experiences have shown the way and demonstrated that with consistent and deliberate public support –technological development,capacity investment and adoption of EVs can be encouraged, with positive outcomes, both economically and environmentally for the country and its citizens.