Stronger policies to promote electric cars to tame the Corona crises in the car industry
As we are witnessing major UK, US and European carmakers to stop or cut production due to the horrendous Corona epidemic, not only do we see a massive economic shock in the car industry and for employees, but we are also witnessing a potential pause in the transformation from fossil-fueled to electric cars all over Europe.
As policymakers in Brussels and all the European capitals are preparing different forms of economic and financial aid–packages to both its citizens and its businesses, the Norwegian EV Association has a proposal to the policymakers; enforce the incentives for buying electric vehicles to push EU’s green mobility. This can be done by introducing a reduction or exemption on VAT for electric cars. Or it can be accomplished by creating systems where purchase tax on the most polluting cars finances incentives for zero-emission cars without any loss in revenues. We believe that strong EV policies will have a triple positive effect.
Firstly, it will stimulate the car market so more people will choose an electric car the next time they buy a new car. Secondly, it will stimulate the industry to reopen production of electric cars quickly after the Corona wave has fallen. This will also mean that thousands of employees will get back to work. And thirdly, to prevent massive fines to the car industry for not being able to live up to the EU target that the average new car must not emit more than 95g/km for 2020 and 2021, a VAT exemption or other strong incentives across Europe on sales of new electric cars will fulfil this target. Such a VAT measure as part of rebuilding a fallen car industry will keep us on track to a achieve EU’s climate targets for 2030. And consumers will save on their fuel bills which is good economics in a time of crises. It is important to remember, that transport is the only sector in which greenhouse gas emissions are still higher than they were in 1990.
The Norwegian Electric Vehicle Association is the world’s largest EV driver association with 75.000 members, and that is in one of the smallest countries in Europe if you look at the population size. The Norwegian policymakers’ decision on a VAT exemption on sales of new electric cars, has been a cornerstone in the Norwegian success to transform our carpool from fossil fuel to electric cars. Almost half of all newly sold cars in Norway today are fully electric. An electrifying and motivating fact.
If we just look at Norway, our comprehensive survey among 16.000 Norwegian EV drivers shows that 82 per cent answer that they would buy another electric vehicle if they had to replace their existing electric car tomorrow. Only 4 per cent answer that they would go back to a fossil–fueled car. Another interesting finding is, that when we have asked the Norwegian electric car owners about what the three most important benefits for EV’s in Norway are, “exemption from VAT” top the list with 69 per cent. And if we broaden the scope just a little bit and look at the Nordic countries, the Nordic EV barometer shows that barriers for not buying an electric vehicle are between four to five times higher in Sweden, Finland and Denmark compared to Norway. Why, because economic incentives are hardly not provided for by the politicians. Plans for buying an electric vehicle is similarly much higher in Norway compared to our Nordic neighbours.
Now, it is time to transform the European car industry so that it will be better prepared for the electric future in areas of transportation and infrastructure. In this time of crises, it is time to transform and not to postpone or reject environmental rules and targets. We recognize that the question on VAT and purchase taxes is solely for each EU member country to decide. But with a mix of the EU granting member countries to introduce shift VAT exemptions for all newly sold fully electric cars and policymakers using such smart economics as VAT to push green mobility, this would be smart economics, smart environmental politics and good for consumers.