Norway—blessed with considerable hydrocarbon resources—is Europe’s largest oil producer, the world’s second largest natural gas exporter, and a significant oil exporter. Perhaps this makes it an unlikely candidate for its recent designation as electric vehicle hot spot, but nevertheless, Norway’s current rate of electric vehicle adoption is the highest in the world.
In November, almost 1,700 electric vehicles (including used imported vehicles) were sold in Norway. It might not sound like much compared to the 10,000 electric vehicles sold in October in the United States until you remember that Norway’s population of 5 million people is equal to 1.5 percent of the United States. As the red line shows, Norway’s electric vehicle uptake rate in November was 20 times that of the United States’ in October, as the American uptake rate remains below 1 percent. Additionally, electric vehicles are some of the top selling cars in Norway in recent months. Tesla’s Model S was Norway’s number-one selling vehicle in September, while Nissan’s LEAF was the top-seller in October, taking 5.6 percent of the new car market.
Why are electric vehicles so successful in Norway? A few reasons are structural. First, the majority of Norway’s population is centered near the capital city of Oslo, reducing the demand for longer-range journeys. Second, more than 4,000 charging stations have already been installed in the small country, 127 of which are rapid chargers. Third, Norway’s gasoline prices are high even by European standards, averaging well over $9 per gallon
But perhaps most importantly, Scandinavian countries are known for an environmental emphasis in both culture and public policy. Norway provides a number of soft incentives on electric vehicles, including access to bus lanes, free ferry trips, free toll roads, free charging, a low annual road fee, and free parking, but the most significant factor by far is what electric vehicles come without: purchase tax. Norway’s new vehicle tax is equal to roughly 100 percent of the vehicle purchase price, with additional fees levied on vehicles with lower fuel economy.
This benefit is, of course, widely misunderstood. One article in Daily Caller claims that the Norwegian government is “handing out” $90,000
to its citizens to purchase Teslas. This implies that the government provides a $90,000 purchase subsidy, but it’s quite the opposite—it simply exempts electric vehicle buyers from the taxes typically levied on gasoline vehicle purchases.
A valid point could still be made that the Norwegian government is aggressively subsidizing electric vehicles, and it is true that by exempting electric vehicles from typical taxes and additional fees, it has gone to great lengths to make electric vehicle ownership more appealing. However, savvy observers will note that these benefits come almost entirely from waived revenues rather than direct subsidies. Norway’s government may feel comfortable with this approach given that it boasts a $752 billion national sovereign wealth fund
developed from saving and investing its massive oil export revenues. Furthermore, Norway currently consumes only 13 percent of its oil production, allowing it to export the vast majority. Additional growth of the electric vehicle market will enable Norway to increase oil exports even more, further bolstering its national wealth and cutting its exposure to the global oil market.
The take-home lesson is of great relevance to American policymakers. A robust oil industry and booming electric vehicle market are not incompatible—in fact, the latter can support the former, and both are good news for energy security.