There have been many false dawns for the electric car. France and the UK were among the pioneers of electric vehicles in the late 19th century, with well-heeled customers using them for short trips around cities. By the early 1900s, however, the discovery of abundant oil reserves and larger road networks had helped to undermine the case for electric in favour of petrol.
Today, more than a century later, polluting diesel and petrol cars still dominate sales globally but there are encouraging signs that 2021 could prove the start of a lasting electric future. Norway, a nation whose wealth is based on fossil fuels, last year became the first country in the world where the sale of electric cars overtook those powered by petrol, diesel and hybrid engines. Electric vehicles made up just over 54 per cent of all new cars sold in the country in 2020, a global record, and up from a mere 1 per cent of the overall market a decade ago. It still has some way to go but Norway looks on course to meet a government target, set in 2016, of banning sales of all internal combustion engine vehicles by 2025.
As policymakers look to rebuild their economies after the coronavirus pandemic, Norway’s success in promoting the uptake of EVs provides an important lesson in how targeted policies can help to change consumer behaviour and spur private-sector investment. Early and generous government support as far back as 1990 in the form of a temporary exemption from the country’s vehicle purchase tax proved an important first step.
Since then other initiatives, including lower road taxes and the removal of charges for toll roads and public ferries, have helped to spur the uptake of EVs. Crucially, while an extensive charging infrastructure was begun with government money, it kickstarted subsequent private sector investment.
Norway’s fossil fuel heritage may have helped to cushion the loss of tax revenues but the country’s success offers a road map for others in how to promote a green industrial revolution. Britain’s Boris Johnson last year vowed to end the sale of new petrol and diesel cars and vans by 2030 as part of a 10-point green plan. The target is laudable but only achievable if accompanied by an improvement of the existing charging infrastructure for EVs. Britain’s motor industry body last September pointed out that for customer demand to keep pace with the growth in the number of zero emission capable car models available, at least 2.8m new public charging points would need to be built by 2035 — an investment worth £16.7bn.
Ultimately, the goal must be for EVs to become commercial in their own right. A key tipping point will come when they cost as much to produce as conventional vehicles. Mass production and competition will help, and the interest of Apple, the maker of the iPhone, in entering the industry possibly through a tie-up with Hyundai, is an indication that both are on their way. Norway has begun to eliminate some of the previous fringe benefits of owning an electric car such as free parking, charging and no tolls. The next critical question will be when to phase back in taxes for EVs. A key challenge for the industry will be how to produce cheaper and more efficient batteries.
For now, the optimism contained in forecasts that global EV sales will grow 50 per cent or more this year appears well-founded. At the same time, the remarkable stock market run of Tesla, which has made Elon Musk the world’s richest man, shows that investors are betting electric cars are here to stay, irrespective of which company ultimately inherits the electric future.
