The entire purpose of providing motorists with grants for electric cars is to increase the sale of these low carbon emissions vehicles. However, it appears as if the Norwegian Government has overdone it with the generosity of its incentives. Its subsidy program has been so successful that Norway is now the largest users of electric cars on the planet. The problem is, the massive grants have eaten into the Government’s budget to the point where the aforementioned incentives are to be reviewed.
Last week, the number of electric cars in Norway exceeded the 50,000 mark, a figure that wasn’t supposed to be reached until 2018. This has happened due to Government schemes including the cutting of taxes and inclusion of benefits for EV drivers such as free recharging stations, bus lane use and an exemption from parking fees and tolls.
During 2015, 20% of all vehicles sold have been of the electric variety and Norway accounts for approximately 33% of all EVs sold in Europe despite its tiny population in relation to the rest of the continent. According to the finance ministry, the review’s outcome will be announced in May when a revised budget is due.
Will Incentives Be Cut?
The existing scheme has been offered to motorists for the last three years but it faced criticism due to the immense increase in the sales of the Tesla Model S. This is deemed to be a ‘luxury’ model and the Norwegian Government’s budget was hit to the tune of an estimated 4 billion crowns ($510 million).
The Tesla Model S retails for around $70,000 though this can rise to $100,000 depending on ‘extras’. Despite the high price, it made up 3% of Norway’s vehicle sales in 2014 and critics said this was a sign that subsidies should not be given to wealthy EV buyers. Other electric car models such as the e-Golf and Nissan Leaf have also risen since the scheme started.
According to the Norwegian Electric Car Association, the fact that Norway leads the world in EVs on the road is not enough since only 2% of vehicles being driven on the nation’s roads are electric cars.
A major benefit of the scheme is the significant reduction in greenhouse gas emissions produced by Norway as a combination of more EVs and an increasing reliance on hydropower for electricity helps the nation meet its goal of reducing emission levels in 2030. Norway’s goal is to ensure emission levels are 40% less in that year when compared to the 1990 levels.
Norway is also the largest producer of oil and gas in Western Europe as it produces 3.7 million barrels of oil equivalents daily while the nation’s offshore energy sector accounts for 20% of its economy.