The market share of electric cars, which was only a fraction of that of gasoline cars a few years ago, has reached 50 percent in Norway. Over the past 12 months, an identical number of electric vehicles as gasoline cars have been manufactured in Norway, demonstrating the country’s exponential adoption of electric cars.
Electric Cars Favored Over Gasoline Cars
In Norway, a liter of gasoline costs around $2, a rate that is substantially higher than in other places such as South Korea and Japan that are also known to have expensive gasoline. In contrast to high gasoline costs and taxes on conventional vehicles, the Norwegian government does not impose tax on the sale of electric vehicles, allowing consumers to obtain electric cars at around 50 percent of the cost required to purchase gasoline-powered vehicles.
According to a report by the Norwegian government entitled “Sales of Petroleum Products,” the demand for petroleum products have fallen for the first time in history, primarily due to the rapid adoption of electric vehicles and the drop in demand for gasoline and fuel.
“Motor gasoline sales declined by 2.9%, dutiable diesel fell by 2.7%, and duty-free diesel declined by 2.6%. This decline follows sales that were flat in 2014, and then grew by 1% in 2015 and 3.2% in 2016. Overall petroleum product sales declined by 2.2%, although some categories of consumption, such as heavy fuel oil, jet kerosene, and other petroleum products all showed higher consumption,” the government’s report read.
The embrace of electric vehicles in Norway can be attributed to newly implemented policies of the Norwegian government, and its intent to ensure all vehicles sold in the country are electric from 2025 onwards.
Irina Slav, a consultant with Divergente LLC, a consulting firm that collaborates with companies in the oil and gas industry, noted that the Norwegian government has also provided generous incentives to drivers of electric vehicles, including free parking, substantially lower taxes, and no toll charges.
However, experts in the oil industry are not yet convinced that the increase in demand for electric vehicles is enough to impact the oil sector. Slav revealed that despite the decline in demand for petroleum products, Norway’s domestic oil production has been increasing.
“After all, oil exports account for 15 percent of its GDP, and although this figure is not as high as it is in oil-dependent economies, it is still substantial enough to motivate measures to hike production,” wrote Slav.
Energy specialist Robert Rapier further explained that peak demand for electric vehicles has not occurred in Norway as of yet, and it may take the government imposing a ban on gasoline vehicles by 2025 to enact a major change in the oil industry, which is highly unlikely. Rapier said:
“If Norway tells us anything, it’s that even rapid EV growth isn’t going to lead to peak demand as quickly as proponents think. It isn’t even clear that peak demand is yet occurring in Norway.”
Progress is Being Recorded
Similar to the growth of the internet, cryptocurrency, blockchain, AI, VR, Internet of Things, and other emerging technologies, there exists an adoption curve for electric vehicles. While the rapid increase in the adoption of electric vehicles has not been sufficient to hugely affect the oil industry, it has been enough to demonstrate the possibility of eliminating gasoline vehicles in Norway in the long term.