Power and renewables

Three lessons the U.S. (and Will Ferrell) can learn from the Norwegian EV experience

Three lessons the US and Will Ferrell can learn from the Norwegian EV experience

Through various initiatives—including exemption from import taxes, registration taxes, roadway tolls, and public parking fees—Norway’s government has encouraged EV adoption

GM seemed to steal the show on Super Bowl Sunday with their “No Way, Norway” ad. If you haven’t seen it, Will Ferrell expresses disbelief that the U.S. is behind Norway in per-capita electric vehicle (EV) sales. He recruits fellow celebrities Awkwafina and Kenan Thompson to head to Norway and show the Norwegians who’s boss. At the end of the ad, “we’re coming, Norway” flashes across the screen followed by “30 new EVs by 2025.” The ad complements similarly timed announcements from the federal government, Ford, Volvo and others regarding noteworthy commitments to EVs.

I’ve been delighted by the momentum that seems to be building here, but I’d like to take a step back and discuss Norway a bit further. Norway didn’t get to number one over night, and where they are now reflects not only 30 years of government support but a few other key factors as well.

Government Intervention and Attractive EV Models
Through various initiatives—including exemption from import taxes, registration taxes, roadway tolls, and public parking fees—Norway’s government has encouraged EV adoption. Figure 1 shows these interventions in blue. However, it was not until highly attractive EV models were introduced that the market really took off (shown in green and orange). Customers were excited about the Mitsubishi i-MiEV and Nissan Leaf—and even more excited about the Tesla Model S—and EV registrations increased 5-fold within just a few years of their release.

Key events in Norway EV trajectory
Figure 1. Key Events in Norway’s EV Trajectory
Source: DNV, 2020.

Cost Competitiveness
Another huge factor in Norway was the steady movement toward parity in upfront costs for EVs and vehicles with internal combustion engines (ICE). Indeed, in 2020, the purchase price (including taxes) for a Volkswagen e-Golf in Norway was the equivalent of approximately $33,980 (U.S. Dollars), while the purchase price for an equivalent Volkswagen Golf with an ICE was $34,790. As seen in Figure 2, the import price of the e-Golf is considerably higher, but the e-Golf is exempt from all taxes to which the Golf is subject except for the scrap deposit. Ultimately, the price for the e-Golf is lower than the ICE Golf because of tax exemptions.

Price and tax comparison
Figure 2. Price and Tax Comparison – Volkswagen Golf and E-Golf in Norway, 2020 (Converted to USD)
Source: DNV, 2021 based on Norsk Elbilforening, 2020.

What This Means for the U.S.
So why is this so important for us here in the U.S.? Because even though the operations and maintenance costs of EVs are far lower than ICE vehicles, DNV’s research with U.S. consumers suggests they typically don’t consider total cost of ownership (TCO) when buying their vehicles and instead focus on the upfront cost. In 2020, Consumer Reports found TCO savings of $6,000 to $10,000 over the lifetime of the vehicle largely because of reduced maintenance costs but also because of reduced fueling costs. This is a substantial savings.

When we asked consumers who currently own or lease vehicles what would increase their likelihood of acquiring an EV, the top response was “lower purchase price.” In Nevada and New York, for example, nearly half of consumers said a reduced upfront cost would increase their likelihood of acquiring an EV as their next vehicle (Figure 3).

Ensuring customers understand the reduced TCO associated with EVs is vital–and pushing original equipment manufacturers (OEMs) to continue diversifying the array of EV models available in the U.S. will help ensure customers have attractive options for all form factors and price points. These customers will not only reap the benefits of reduced TCO but also of reduced emissions, better torque, a quieter ride, and numerous other benefits associated with EVs.

Responses to “What Would Increase Your Likelihood of Acquiring an EV?” Among Residential Electric Customers of National Grid New York
Figure 3. Responses to “What Would Increase Your Likelihood of Acquiring an EV?” Among Residential Electric Customers of National Grid New York (n=843)
Source: DNV, 2020.

What’s next for EVs in the U.S.?
So where do we go from here? Here’s a few ways we can follow Norway’s lead:

  1. Coordinate policies and incentives to support EV access and affordability (this is a huge challenge, but at minimum we should ensure our policies support EV adoption rather than discouraging it)
  2. Continue pushing OEMs to broaden the range of attractive EV models to meet consumers’ needs—across all form factors and price points
  3. Educate consumers regarding the benefits of EVs—including the reduced TCO compared to ICE vehicles as well as the environmental benefits, quieter ride, and the fact they’re really fun to drive

It’s important to note that these aren’t easy tasks—all these changes will take time to implement, but they are a step in the right direction. There’s a lot more we’ll need to do. And if we’re really coming for Norway, we need to really step up our game.