Zero Emissions Car Tax Exemption, Make Norway An Electric Car Heaven

Tesla dominates electric car sales in Norway. (photo; Tesla.com)

JAKARTA - Electric cars will now account for nearly two-thirds of Norway's new sales by 2021. Tesla is the best-selling car brand overall, as the country has pursued its target of being the first country to end sales of gasoline and diesel cars.

Today Norway, with a population of 5.4 million, has the highest proportion of electric vehicles in the world. While China with its 1.4 billion people is by far the largest car market overall.

Oil-producing Norway has pushed for a shift to zero-emissions cars by exempting battery electric vehicles (EVs) from taxes normally levied on internal combustion engines (ICE).

The tax cuts are expected to help push the proportion of overall electric car sales to as high as 80% by 2022, or ahead of the deadline for ending sales of gasoline and diesel powered cars by 2025.

Overall new sales in Norway are up 25% in 2021 to a record 176,276 cars, of which 65% are entirely electric cars. This market share is up from 54% in 2020.

Although small, affluent Norway is seen as a key market to gain a foothold for new EV players, including Nio's China and Sweden's Volvo Cars affiliate Polestar.

According to the corporate office of the Norwegian Road Federation (NRF) on Monday, December 3, Tesla now has an 11.6% share of the car market in Norway as a whole by 2021. The numbers make it the number one brand for the first time on a full-year basis. They are ahead of Volkswagen of Germany with 9.6%.

The US automaker on Sunday, December 2, reported quarterly shipments far exceeding Wall Street forecasts. They have been able to overcome the global chip shortage as they ramp up production in China.

The Tesla Model 3 is the most popular model of the year in Norway ahead of Toyota's hybrid RAV4 (the only car among the top 10 with an internal combustion engine), and Volkswagen's electric ID in third place.

Industry representatives said they expect EV sales to grow to as much as 80% of the total market in Norway by 2022, although supply chain issues could put the brakes on this target.

"We believe we will exceed 80 percent of electric cars next year," said Christina Bu, who heads the Norwegian EV Association, as quoted by Reuters.

"But there's huge uncertainty in that forecast, and it depends on the delivery conundrum — because a lot of automakers have shipping issues," he added.

"Norway is the country with the greatest openness to EVs, the greatest understanding of what EV driving is and the friendliest to have alternatives," Polestar CEO Thomas Ingenlath told Reuters.

The Polestar luxury sedan is the 10th most popular car model in Norway in 2021 and there will be a Polestar 3 SUV debut in 2022.

"Launching this premium SUV ... will definitely change the way people view Polestar, so I have very high hopes for moving this brand forward," said Ingenlath.

EV makers in China as well have been trying to boost exports in line with Beijing's ambitions to build a world-class auto industry and compete with other traditional car companies.

Nio, an EV from China, has now launched a luxury showroom in downtown Oslo in 2021. This is a first overseas, aiming to sell the Nio ES8 sports car and Nio ET7 sedan as part of its plans to expand globally.

They also plan charging stations and battery swaps. "Our exchange station strategy, we will develop quite strongly (by 2022)," said Marius Hayler, head of Nio Norway. He also added that they expect about 75% of all car sales to be electric by 2022.

While the EV tax exemption has helped reduce greenhouse gas emissions, the policy cost the country 30 billion Norwegian krona (Rp 48.3 trillion) due to lost taxes last year, according to estimates by the Norwegian finance ministry.

Now the country's ruling centre-left coalition party plans to gradually start taxing the most expensive EVs from 2023, while taxes on gasoline, diesel and hybrid cars are steadily increasing this year.