Volkswagen e-Golf was the most sold car in Norway

Volkswagen e-Golf configurator in Norway

 

In October Volkswagen sold 1.146 units of the e-Golf in Norway.

 

Norway shows us that it’s very easy to make electric cars successful. It’s not rocket science!

 

I always find interesting how some some well-intentioned public policies are actually counterproductive. In this regard, public policies aimed to electric cars are great examples.

A competent policy maker knows that to increase the consumption of healthy food, we shouldn’t subsidize it, instead we should tax the unhealthy food. The same principle applies to electric cars. We shouldn’t subsidize them, instead we should heavily tax products that increase pollution and decrease the well-being of the whole community.

 

Let’s compare some consequences of two different approaches:

 

Strategy 1 (subsidize electric cars):

  • Polluting cars continue to be cheap to buy and run, consequently they sell in great amounts.
  • Automakers keep the prices of electric cars high so that they can justify the existence of subsidies.
  • The myth that the technology isn’t ready yet and needs subsidies to exist is perpetuated, furthermore the buyers of electric cars will be seen as freeloaders…
  • The myth above also helps automakers to undermine electric cars and keep selling polluting cars without the public opinion disapproval. Automakers are well-intended but have no alternative right?! The government admits that the technology isn’t ready yet…

 

Strategy 2 (tax polluting cars and fuels):

  • By increasing the purchase and running costs of polluting vehicles their sales will decrease, then automakers will have no alternative other than to sell electric cars – if they want to continue to have high volume sales. It’s better to sell electric cars than no cars at all… right?!
  • Without alternatives, automakers will finally be encouraged to sell electric cars. They will no longer be undermined by being grossly overpriced.

 

Volkswagen prices in Norway

 

As you can see above, resorting to efficient tax policies, in Norway the electric Volkswagen Golf is cheaper than the ICE (Internal Combustion Engine) counterpart. This is an example of a public policy that actually works.

I’m always amazed to see some electric car supporters and associations think that the subsidies are actually good. To me it’s obvious that they are very counterproductive to our cause.

 

To sum up, while Norway’s example is very positive, this car market isn’t big enough to spark the electric car revolution. It takes much bigger markets such as China or the European Union to make automakers actually adapt to change.

 

What about you? Do you agree that governments should drop the subsidies to buy electric cars and instead they should heavily tax polluting cars? Which strategy do you support, 1 or 2?

 

 

More info:

http://ev-sales.blogspot.pt/2017/11/norway-october-2017.html

Pedro Lima

More than natural resources, are wasted human resources that bothers me the most. That’s why I’m a strong advocate of a society based on cooperation, not competition, that helps every individual to reach his full potential so that he can contribute back to society. “From each according to his ability, to each according to his needs”.

You may also like...

5 Responses

  1. Magnus H says:

    Isn’t the electric car subsidised in Norway? As far as I know, there’s no VAT (25%) on electric cars, and there’s no extra car tax when you buy them.

    • Petter says:

      So it is, but then again from a very high level of taxes on cars in general (norwegian new cars are hillariosly expensive to buy compared to the neighbor countrys). The bev:s in norway also have a set of other subsidies like allowed to drive in bus lanes, free parking etc.

      I still find the argument of Pedro right thou, in a more long term view and also as a strategy if we turn to look at fuels rather than vehicles.

  2. Another Euro point of view says:

    Norway can afford this way of subsidizing EVs (by not collecting VAT on them), other countries can’t. Norway is one of the richest nations on earth mostly thanks to its oil exports.

  3. eali says:

    Maybe, instead of using the word “polluting”, we’d better use “poisoning”.

    Because people keep dying – you know.

    We should simply put a sticker on ICE cars, near the pipe, with a proud claim: “I poison air your kids will breathe”.

  4. Lars says:

    There is a third option, lets call it the Danish Model.
    You start with having ICE cars heavily taxed with a high registration fee and zero emission cars being sold without any registration fee.
    At some point you decide to stepwise over the course of a few year to increase the registration fee to 100% of the registration fee of ICE cars. The registration fee is value based, so the more expensive the car the higher the registration fee.
    When the first step of 20% registration fee is introduced on the 1.1.2016 the sales activity of BEV cars totally stalls. (Dec 2015: 1588 BEVs sold, Jan 2016: 68 BEVs sold)
    When the second step of 40% registration fee is introduced on the 1.1.2017 the sales activity is hit again. (Dec 2016: 305 BEVs sold, Jan 2017: 17 BEVs sold)
    The number of BEV cars sold is lower than expected by the government, so they decide to “fix” that problem by lowering the registration fee to 20% again until 5000 new BEV cars are sold or until the 1.1.2019 what ever occurs first. The 5000 BEVs are however not counted from the time where the change was decided but from the 1.1.2016. When the 5000 BEV cars are sold or the 1.1.2019 is reached the registration fee is again raised to 40% and increases again each year at the 1th of January.
    What does this mean for the person interested in buying a BEV car? If you buy the car now and it is in stock you pay 20% registration fee, if you wait a few month or the car is not in stock you probably pay 40% registration fee, because you don’t know how many BEV cars will be sold at the point in time you receive your car. I guess the BEV marked will be dead again next year at this time or even before that.

    Now you may think that this is not an alternative model, but there is more. Since the introduction of the registration fee on zero emission cars, the Danish government has lowered the registration fee on all cars every year. The last change was just over a month ago. This seems not to bad considering that this means lower car prices for all cars also BEVs, the last change did however mean that price of car like the Volkswagen Golf decreased by 3400 Euro, the prise of a Nissan Leaf did however only decrease by about 650 Euro. So the Danish Model means that you decrease the registration fee on ICE considerably more than on BEV.

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisment ad adsense adlogger