Global EV Transportation Review

The Norwegian government is gradually winding down the subsidy-led growth model of the electric vehicle market. This has been part of the discussions for some time, as the government weighed the budgetary impact of the support measures vis-à-vis the results and objectives. The considerations align with the principles of equity (paying for the available public infrastructure) and viability (revenue shortfall) of public finance.

The first in the list of incentives phased out is the value-added tax (VAT) exemption. With effect from January 1, 2023, the government abolished the VAT exemption for passenger vehicles costing over kr500,000. The existing tax is at 25% of the incremental car value above kr500,000, which is still relatively lower than the conventional ones. In addition, electric vehicles are taxable by weight – kr12.5 per kg above 500kg of vehicle weight. The weight-based tax effectively covers all electric vehicles. Electric vehicles still benefit from other tax exemptions that are not available to non-electric ones. For instance, there is a one- time fee together with a flat 25% VAT on the list price that is not payable for electric vehicles.

There are ongoing deliberations about other incentives. One is the benefits extended in terms of tolls for electric vehicles in the larger cities. Electric vehicles need to pay just 50% of the toll that conventional vehicle owners otherwise pay. The plan is to progressively raise this share to 70% by 2025 when it is eliminated (only zero-emission transport to be sold by 2025).

In the case of the charging infrastructure, some of the critical measures in the regulatory framework helped set the pace of growth. One of them is the ‘right to charge’ wherein households could seek charging facilities as an entitlement from their respective municipal or local authorities. Local authorities have been extending incentives, such as free parking, reserved lanes, subsidizing a part of the upfront cost of charging point installation, etc. Steps are underway to harmonize the charging stations’ operations for ease of access – as one example, all the charging stations installed from January 2023 must offer a card payment option. A separate timeline is expected for other charging stations.

The demand for charging infrastructure is set to grow in Norway as the policy goals expand to cover more modes of transportation. While the short-term goals aim to have 100% emission-free passenger cars, light vans, and new city buses by 2025, all new heavy vans, 75% of new long-distance buses, and 50% of new lorries need to be emission-free by 2030. This is likely to place additional pressure on the charging infrastructure. The transition to emission-free transportation is expected to create a fleet of 1.5 million EVs by 2030, as per NVE, the electricity market regulator in Norway.

The fast-charging segment is attracting interest from multiple stakeholders. The city of Oslo has a grant scheme for fast-charging stations for electric trucks and buses. The first round of funding covered 80% of the installation costs. As of end 2022, the scheme had total disbursement worth €2.3 million. Subsequent funding rounds are expected in this regard to enable capacity expansion. In May 2022, the equipment manufacturer ABB, in collaboration with the charging operator Eviny, installed the first Terra 360 series of 360kW fast-chargers. The pilot installation will be followed up with a phased rollout across the locations of Eviny’s operation, besides others.

In 2022, the automaker Tesla opened its proprietary fast-charging network for vehicles of other makes, at company-determined prices. Tesla’s initiative is a pilot under evaluation. Adding to the list of initiatives, in August 2022, Chinese electric vehicle company NIO launched its second battery charging and swapping station in Norway. Battery swapping is unexplored and could present an alternate option to the country’s overall charging network. Various other enterprises are approaching the charging market through partnerships. In collaboration with charging operator Recharge, IKEA Norway aims to have over 300 new chargers within 2024. The energy company/utility StatKraft has a wholly owned charging operator company Mer for capitalizing the opportunities. The company is of late exploring diversity in Mer’s shareholding, for which financial advisors have been appointed.

Battery manufacturing is another significant investment avenue, especially with the Gigafactory project pipeline. In January 2023, Elinor Batteries (established by the company Vallinor) announced its plan to set up a Gigafactory in Orkland. With an estimated investment of €1 billion, the first production batch is expected by 2026. The company FREYR Battery meanwhile is progressing with ongoing development work for its Gigafactory project (named Gigafactory Arctic). The total construction and commissioning cost is expected to be worth €1.7 billion in capital investment. Notably, FREYR has signed agreements with Statkraft and Glencore for renewable energy and material sourcing, respectively. Another company, Morrow Batteries, is in the development stages of an upcoming battery cell production facility in Arendal, Norway.

It is noteworthy that in June 2022, the government launched the national battery strategy, outlining the planned policy steps to help facilitate the local battery manufacturing value chain. Key steps in this include the provision of capital, loans, and guarantees to enable private capital investment, supporting pilots, facilitating access to renewable energy, development of land and infrastructure, and industrial partnerships with other countries.