Carlos Ghosn, CEO of Nissan Renault, is seen promoting the Nissan Leaf electric car in Norway, 8 April 2013. Photo credit: Norsk Elbilforening on Flickr (CC BY 2.0)
There is a low hum that Norwegians have grown used to as they walk down their streets. The sound of Teslas, Nissan Leafs, BMW i3s, VW e-Golfs and Kia Souls gliding past each other.
While electric cars are increasingly noticeable in most capital cities, the sheer number in Oslo and throughout the rest of the country can surprise visitors. Norway has been described as a world leader and last year more than half of new car sales were electric or hybrid.
The Norwegian parliament has set 2025 as the goal for all new cars to have zero emissions, compared with the UK’s 2040. However, such enthusiastic embracing of electric vehicles by ordinary Norwegians is not all down to ecological benefits but something more simple – money.
While motorists are typically subject to punitive levels of taxation, those who buy a purely electric vehicle are rewarded with a string of incentives worth thousands of pounds. Buyers escape heavy import or purchase taxes and are also exempt from 25% VAT. They also avoid road tax, road tolls, pay half price on ferries, get free municipal parking in cities and can usually use bus lanes.
Which is why the country is the third-largest market for electric vehicles in the world, after the US and China. And with a population of just 5.35 million. So what can the UK learn from the Norwegians?
The cost of driving
Buying a petrol or diesel car in Norway is expensive. A Honda CR-V starts at £21,000 new in the UK but there the bill begins at 486,900 kroner, or £46,000. Even taking into account higher consumer prices – one third more in Norway than here – the difference is significant. But while electric cars cost more to make and buy, since they escape all initial tax and VAT, their price is in line with fossil-fuel vehicles.
Erik Figenbaum, chief research engineer at Norway’s Institute of Transport Economics, said an imported VW e-Golf 36kWh cost £28,285 before taxes, far more than the petrol-fuelled Golf 1.2L at £19,867. After the Norwegian tax system has done its work, the figures look very different. The petrol version incurs £5,866 in registration tax, while VAT at 25% adds another £4,966, lifting the purchase price to a hefty £30,699. That makes the petrol car £2,414 dearer.
The electric version is also a lot cheaper to run, with annual charging costs averaging £264 against an average £1,293 on petrol. Electric cars are exempt from widespread road tolls, saving owners around £1,319 a year, and road-tax savings bring in another £267. Overall, an e-Golf is more than £3,000 a year cheaper to run, says Figenbaum. “The same situation is found in most vehicle classes with the exception of the smallest petrol cars, where registration tax is very low.”
In the UK, the lack of incentives is part of the reason that sales are lower. Data company cap hpi shows the e-Golf costs £31,090, against just £18,785 for a petrol-fuelled Golf 1.2L.
The company’s Chris Plumb says the initial price remains the biggest hurdle. But, he adds: “A three-year-old electric car is still better value due to lower service, maintenance and repair costs, zero road tax [vehicle excise duty] and cheaper charging.”
Insurance costs for electric and fossil fuel cars are similar in Norway, and the difference in the UK is marginal, although an electric equivalent can be more expensive to cover. In England, the Renault Zoe supermini costs £395 a year to insure, whereas the petrol fuelled Renault Clio supermini is £246.
GoCompare.com’s Matt Oliver says that as electric cars are more expensive to buy and repair “claims are likely to be more expensive, so insurance costs more”.
Behind the figures
Despite the enthusiasm in Norway, achieving its 2025 target could still be difficult. Most are second cars, often used by commuters looking to escape road tolls. Figenbaum says it may not be economic to build a charging infrastructure that will meet demand at peak travel times. “Users will thus confront a trade-off between daily cost and time savings, and longer stops and charging queues on long distances,” he says.
Many Norwegians also suffer from “range anxiety”, clinging on to a gas-guzzling SUV large enough to carry their cross-country skis and other kit to the clean air of their mountain cabins.
Christina Bu, secretary general of the Norwegian Electric Vehicle Association, says 70% of its 60,000 members also own a fossil-fuel car and the transition to fully electric cannot happen overnight.
In the UK, government incentives – such as the Low-Emission Plug-In Grant – aren’t doing enough to change habits, says RAC head of roads policy Nicholas Lyes. “We may need more radical action, for example, looking at VAT on sales of zero-emission vehicles.”
Other measures would include an improved high-speed charging infrastructure and on-street charging for residents and in car parks.
Jack Cousens, head of roads policy at the AA, says a diesel scrappage scheme would add momentum to the movement from fossil fuels.
While Norway has the advantage of being a wealthier country with a smaller population, less congested roads, easier parking and plentiful hydroelectric power, the tax incentives are seen as being expensive and ultimately unsustainable. Once Norway has gone electric, it is expected the taxes will be back.
Perversely, its electric shift is helped by the fact that its petrol or diesel cars are the most expensive in Europe. This is the only country where running an electric car is actually cheaper.
Case study: An Englishman’s double take
Like many families, Marcus Borley and his wife Hege run a small electric vehicle as a low-cost everyday runabout, and a diesel for family trips to the mountains.
Marcus, 47, an Englishman who lives in the Oslo suburb of Lillestrøm, is a committed environmentalist but believes Norwegian attitudes are not as forward-looking as Britons think. “The rise in electric cars is purely down to the generous range of subsidies,” he says, thus bringing small electric cars within the reach of working-class families. Teslas remain status symbols for the wealthy. “They are everywhere in Oslo but, starting at £80,000, are beyond the average family, even with the subsidies.”
But Marcus and Hege’s Citroën C-Zero saves them several thousand pounds a year, including £250 road tax, £2,000 in Oslo commuter tolls and £200 due to free parking and charging.
“Most Norwegians still own a petrol or diesel car, and of course the nation amasses huge wealth from oil production,” he adds.