The Country Adopting Electric Vehicles Faster Than Anywhere Else

Fueled by cheap power and government subsidies, Norway is racing to ditch the “fossil car.”

How Tesla and the Electric Car Conquered Norway

Since the 14th century, Akershus Fortress has protected Oslo from raids by bloodthirsty Swedes. Now a Cold War bomb shelter in its basement is being repurposed to help save the Norwegian capital from more insidious foes: pollution and global warming. Starting this month, electric car owners will be able to drive down a narrow ramp between rough-hewn rock walls dripping with condensation and plug in at one of 86 charging stations—for free.

The facility will get plenty of use as Norwegians switch to electric vehicles faster than anyone else on the planet. More than a third of all new cars are either fully electric or plug-in hybrids, well over 10 times the proportion in the U.S. With about 100,000 electrics on the road, Norway (population 5 million) trails only the U.S., China, and Japan in absolute numbers. By 2025, the government has suggested, there may be no gasoline- or diesel-powered cars sold in the country. “It’s safe to say that Norway is the first mass market for EVs,” says Sture Portvik, the city official overseeing the Akershus garage.

The basement of Oslo’s Akershus Fortress has been retrofitted with dozens of charging stations for electric vehicles.
Photographer: Anne-Stine Johnsbråten for Bloomberg Businessweek

Norway’s electric vehicle boom has been built on generous government incentives. EVs are exempt from car-purchase taxes and the 25 percent sales tax levied on just about everything else, and they get a break on annual fees. Drivers plug in for free at municipal power points, generally don’t pay tolls, and can use bus lanes to avoid traffic. On ferries across Norway’s deep fjords, electrics travel at no cost. It’s no surprise, then, that Norwegians call gasoline-powered vehicles fossilbiler—fossil cars.

The subsidies were introduced in the 1990s to support a fledgling, and never particularly successful, domestic electric vehicle industry. “There was hardly anything to buy,” so few people took advantage of the perks, says Christina Bu of the Norwegian EV Association, a consumer group with 40,000 members. The incentives were still on the books when the first truly competitive options, the Nissan Leaf and the Tesla Model S, were introduced about five years ago. Suddenly, “the market expanded before politicians realized what was going on,” Bu says.

Akershus’s mounted displays track available spots in the subterranean garage.

Photographer: Anne-Stine Johnsbråten for Bloomberg Businessweek

Norway’s plug-in leader per capita is the municipality of Finnoy, where 281 cars out of a total of 1,508—or 19 percent—are fully electric, compared with 4 percent nationally. One big reason: Battery-powered cars don’t pay the $18 toll for the tunnel leading to the town. Early on, many Norwegians considered electrics only as a second car and kept a conventional vehicle for long-distance driving, says Pierril Pouret, who leads Nissan Motor Co.’s plug-in business in the Nordic region. But as ranges improve, “we’re arriving at the moment when the majority of the market is about to shift to EVs,” he says.

Before politicians elsewhere seek to emulate Norway, they should consider its special circumstances. Most important: the electricity. In much of the world, more power means more coal, but Norway’s dramatic landscape provides as much cheap hydroelectricity as its small population needs, so plug-ins don’t strain the grid. Gas costs about $7 a gallon at local pumps, and the tax exemptions are compelling because the country has long levied auto taxes that can double the price of a new set of wheels. “Pay for two cars, get one,” goes a weary maxim.

There’s a problem at the heart of the whole endeavor: If the rest of the world copied the country overnight, the Norwegians would be out of business. Norway is Western Europe’s largest oil and gas exporter, and the revenue lost from tax breaks on Teslas is dwarfed by the $15 billion-plus the government receives annually from the country’s energy sales. Even as Norway tries to reduce emissions on the road, state-controlled Statoil ASA is expanding oil exploration, pushing farther into the Arctic Sea. “We have a very hypocritical policy,” says Daniel Rees, an adviser on transportation and the environment for the opposition Green Party. “The government is trying to create this image that we are a leader in saving the world from climate change, when we are actually one of the main contributors to it.”

Photographer: Anne-Stine Johnsbråten for Bloomberg Businessweek

The man in charge of Norway’s EV policies argues there’s no contradiction between drilling for oil with one hand and plugging in cars with the other. “Yes, we made a lot of money on oil, but we know there are downsides to the product, and we try to take the world to the next level,” says Transport Minister Ketil Solvik-Olsen. A member of the libertarian-leaning Progress Party, Solvik-Olsen is a car guy: Every spare surface in his Oslo office is covered with toy Chevrolets, Ferraris, and Mercedes-Benzes, and he drives a 1985 Cadillac Seville. Yet he concedes the end of the gasoline era is nigh. “It’s not like the world is not going to need oil in 10 years, but maybe you’re not going to use it for transportation,” he says.

Lately, Norwegian officials have begun curbing the incentives. With 17,000 EVs in Oslo alone, blanket exemptions from tolls and carte blanche access to bus lanes can seem a little excessive. Opposition politicians have suggested capping the tax relief available for plug-in purchases so the subsidies cover a smaller slice of the sticker price for, say, high-end Teslas. And the central government in the past year has started giving municipalities the option of watering down some of the advantages. Solvik-Olsen says most of the incentives will disappear once they’ve done their job. “We may have to do this for three, four, five more years,” he says, “but from then on, the market will be in place.”

—With Sveinung Sleire

The bottom line: More than a third of new cars in Norway are electrics or plug-in hybrids, thanks to breaks on taxes, tolls, and lane restrictions.

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