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    Norway EV Profile: EV Penetration Rate To Reach 90% By 2025


    June 14, 2022 - Fitch Solutions Sector Intelligence

     

      THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.

      Norway EV Profile: EV Penetration Rate To Reach 90% By 2025

      • 14 Jun 2022
      • Norway
      • Autos

      Key View: The Norwegian Parliament has decided on a national goal that all new cars sold by 2025 should be zero-emission (electric or hydrogen). We stress that this is not a ban, but a policy target. This means that the sale of PHEVs will also be discouraged. We, therefore, forecast that Norway's EV penetration rate will reach a high of 90.0% in 2025 and it will reach almost 100% by the end of 2031.

      Electric Vehicle Market - Historical Data And Forecasts (Norway 2020-2031)
      Indicator 2020 2021 2022f 2023f 2024f 2025f 2026f 2027f 2028f 2029f 2030f 2031f
      Electric vehicle sales, units 105,431 151,883 166,029 186,309 199,639 208,755 217,140 228,804 239,064 245,332 252,479 260,571
      Electric vehicle sales, % y-o-y 32.8 44.1 9.3 12.2 7.2 4.6 4.0 5.4 4.5 2.6 2.9 3.2
      Battery electric vehicle sales, units 73,036 109,872 137,804 156,500 169,693 187,880 195,426 205,924 215,158 220,799 227,231 234,514
      Battery electric vehicle sales, % y-o-y 21.3 50.4 25.4 13.6 8.4 10.7 4.0 5.4 4.5 2.6 2.9 3.2
      Plug-in hybrid electric vehicle sales, units 32,395 42,011 28,225 29,809 29,946 20,876 21,714 22,880 23,906 24,533 25,248 26,057
      Plug-in hybrid electric vehicle sales, % y-o-y 68.7 29.7 -32.8 5.6 0.5 -30.3 4.0 5.4 4.5 2.6 2.9 3.2
      f = Fitch Solutions Forecast. Source, ACEA, Fitch Solutions
      Latest Developments And Key Drivers
      • In 2021, Norway's electric vehicle (EV) sales increased by 44.1% y-o-y to reach 151,883 units.
      • Breaking down EV sales in 2021:
        • battery-electric vehicle (BEV) sales experienced a 50.44% increase y-o-y; and
        • Plug-in hybrid electric vehicles (PHEV)s experienced growth of 30% y-o-y.
      • Norway is a beneficiary of a strong EV industry policy, which includes government-led purchase incentives and tax exemptions for EVs, as well as investment into associated charging infrastructure.
      • The Norwegian Parliament has decided on a national goal that all new cars sold by 2025 should be zero-emission (electric or hydrogen). We stress that this is not a ban, but a policy target. This means that the sale of PHEVs will also be discouraged. We, therefore, forecast that Norway's EV penetration rate will reach a high of 90.0% in 2025 and it will reach almost 100% by the end of 2031.
      • An abundance of renewable energy, primarily hydropower, informs our view that Norway will appeal as an investment destination to EV battery manufacturers for whom energy availability and cost is a key pull-factor.
      • Norway is a regional leader in EV battery manufacturing, with over 95 GWh in planned, announced and operational capacity. This gives it a 12.2% share of the European market at the time of writing.
      • In May 2022, the Norwegian government announced that it will remove the VAT exemption for EV purchases by the end of 2022. At the same time, Norway will launch a subsidy scheme to replace the VAT exemption. This will have a minimal impact on the country's EV adoption as this will mostly impact the high-end EV buyers.
      • We believe that Norway's EV sales will continue to perform strongly over 2022, especially as more affordable Chinese EVs enter the local market with offerings such as battery swapping stations. However, the vehicle supply challenges will somewhat hold back the market. We forecast that Norway's EV sales will expand by 9.3% in 2022, followed by a 44.1% expansion in 2021. In 2022, we forecast EV sales volumes to reach a high of just under 170,000 units which will represent an EV penetration rate of 77%.
      • Electrification will be an increasingly important factor supporting continued investment in the maintenance and expansion of the country’s road transport network in line with Norway’s low-emissions and decarbonisation commitments. Norway hosts a relatively high level of EV ownership, increasing the appeal of investment in the country’s road network to Norwegian authorities amid a growing focus by the government on transport decarbonisation. We expect the deployment of EV charging infrastructure, in particular, will be an increasingly attractive area of investment in the country, as the country will look to incentivize and support EV adoption, with the Norwegian Parliament having established targets for all new cars and urban buses sold in the country by 2025 to be zero-emission vehicles.
      Norway Is A Global Leader In EV Adoption
      Norway - EV Fleet By Type And EV Fleet Penetration (2018-2031)

      f = Fitch Solutions forecast. Source: Local sources, Fitch Solutions

      This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings.

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