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