How Norway Built An EV Utopia While The U.S. Is Struggling To Go Electric | CNBC Documentary

Norway, the land of the midnight sun, is full of mountains, glaciers, fjords and

electric

vehicles. Many of them. The Scandinavian country has the highest adoption rate of

electric

vehicles in the world. More than 82% of new car sales were electric vehicles last year, and that figure rises to more than 90% if plug-in hybrids are included. Our goal is for all new cars by 2025 to be zero-emission vehicles. We believe that we are going to achieve that goal. In the United States, a paltry 7.6% of new car sales were electric in 2023, up from 5.9% in 2022. In the world's largest auto market, China, 24% of new car sales were electric vehicles in 2023.

Norway's capital, Oslo, is also electrifying its ferries, buses, semi-trailers and even construction equipment. All public transport by the end of this year will be zero emissions in the city. Gas pumps and parking meters are being replaced by chargers. It is an electric

utopia

of the future. What is this? Welcome to my man cave. So how has the Norwegian grid been able to handle all those electric vehicles? Lots of hydroelectric energy. Electric cars cost perhaps a third of the price of gasoline. Because we have close to 100% hydroelectric energy. It is cheap. It is available and renewable. So that's a big advantage.

The rapid expansion certainly hasn't been perfect. There are some side effects that we should watch for. We are basically pushing the cars to the public. Therefore, there has been an increase in the total number of cars purchased. We want change, but maybe not at this pace or this volume. So how did Norway achieve such a high EV adoption rate, and what can the United States learn from that country? We flew around the world to meet with experts, government officials and locals to find out. We flew to Oslo airport and picked up our electric rental car. I'm here picking up my rental car and I've never seen so many electric cars in a rental center before. iX3, the first time I drive an electric vehicle.

Let's see how this goes. The first thing that caught our attention

while

driving was the lack of exhaust pipes on the cars driving on the road. Tesla is the most popular brand on Norwegian roads, with a 20% market share in 2023. We saw them everywhere. The Tesla Model Y was the best-selling car in the country last year, followed by the Volkswagen ID.4 and the Skoda Enyaq. All zero-emission electric cars have license plates starting with E, so they're always easy to spot. California has the highest EV adoption rate in the U.S. 21.5% of new car sales were electric in 2023, a figure that has doubled in the past two years.

But Norway made California look like it was in the Middle Ages. There are chargers everywhere. The streets are quiet in Oslo. The air is pleasantly smoke-free. There has been a notable improvement in air quality in the city. Yes, this is a reduction of around 20% in local pollution. In fact, it was noticed when a gasoline-powered car sputtered past. We found some people still driving gas cars. Some couldn't afford to buy a new car and others still couldn't overcome anxiety over the range of long trips. Despite the abundance of chargers. I need to have a Land Rover because I go to the mountains and that is, eh, a little long for the electric car because I also have an electric car to use in the city, but not for the mountains.

But most people we spoke to were already on their second or even third electric vehicle. I have been driving electric cars since 2012. We just bought a new one which is a Tesla and we are very, very happy with it. We have two electric cars at home. Anything you miss about driving a gas car? No, no, not really, because it was very expensive. When I see gas prices, I think: Damn, it's so expensive these days. So no, I'm not really going to look back. Why is Norway so far ahead of the rest of the world? When it comes to electric vehicle adoption?

There is a combination of many different policy measures that have been carried out over the last 20 years. In fact, we started in 1990, the first measure. In 1994, the Olympic Games were held in Norway, so some of the manufacturers wanted to introduce electric vehicles by then. There was a car called Think, which was very, very small, and at the time it was basically a joke because no one really wanted it. Think never really took off and the company was eventually sold to Ford. The entire parliament agreed that there is some kind of public responsibility to boost green mobility.

And we set a goal for 2025 for all new passenger cars to have zero emissions. And when you have set a goal like that, you have to put some incentives in place to make it work. We started with a zero registration tax and then the most important measure we introduced was zero value added tax. So in Norway there is a 25% value added tax for every item you buy. But reducing that to zero for electric vehicles had a huge impact. But despite all these measures, nothing really happened. Nothing happened because electric vehicles weren't available back then. But everything began to change when Tesla and others began selling electric vehicles in the country.

So we've seen a huge increase in the last ten years. So now eight out of ten new cars are zero-emission vehicles. The remaining 20% ​​are plug-in hybrids and also some gasoline cars. So if you want to buy a new car in Norway, there are very high taxes on polluting cars. But in the case of zero-emission cars, they are exempt. That made electric vehicles cheaper or the same price as a similar gasoline or diesel car. And we also have discounts if you drive on toll roads with an electric vehicle, free parking in some cities, and driving on bus lanes is also a very popular incentive for electric vehicles.

Peter Haugneland is the Deputy Secretary General of the Norwegian Electric Vehicle Association, which was created in 1995 to support consumers in the transition. We now have more than 50 employees and a call center for electric vehicle owners, especially new ones. They need help on how to do this. How do subsidies work? When you go to buy a car, is there a lot of paperwork or is it just a cheaper price when buying a car? You don't have to do anything, you just pay the price, so it's really easy. The electric car will be cheaper to purchase. It is cheaper to use.

Therefore, the electricity bill is lower than that of diesel and gasoline. So this has to be the main goal: to make choosing easier and cheaper. Have there been any negative consequences for this plan so far, maybe something unexpected has come up? I think this is a great success. We have changed the preferences of the public and the user and also the market. I've been asked this question before, but nothing comes to mind. But Syrstad mentioned that in addition to there being more cars on the roads than ever before, another consequence has been that more people are now choosing to drive their electric vehicles instead of taking public transportation.

People prefer to go to the city by car than by bus. That's why there have been some local adjustments when it comes to the price of traveling by public transport, making it cheaper so that it can compete with zero-emission vehicles. Where does the money come from? This is public spending. So it comes from the state budget. What is the annual expense to the government for these incentives? It's getting less and less, but I think it's about NOK 40 billion a year. So far they have spent about $20 billion and we still spend about $4 billion a year. So there is $1,000 per inhabitant, or $800 per inhabitant, in terms of subsidizing the purchase of electric cars, which is quite a lot.

You get an S-Class for the same price as a mid-size economy car powered by an internal combustion engine. Norway is a rich country and much of that wealth comes from its strong oil and gas industry. Norway is Western Europe's largest oil and gas exporter, with the industry expected to account for 24% of the country's GDP by 2024. Gas exports have increased in recent years due to the war in Ukraine, and are very important for Norway to be a stable energy partner with our neighboring countries in Europe that suddenly experience a drop in supply from Russia. But Norway is also targeting a 55% reduction in emissions in 2030 compared to 1990.

That's the same overall target in the European Union. Well, that's something the oil industry knows too. So they are planning the next step, what will be the new type of energy they will produce. So now we have a huge plan for wind production on the Norwegian continental shelf. So we are all working on this transition year after year with the same goal in 2030. We discuss a lot about the oil industry in Norway. The Norwegian government has said that we will go for electric cars anyway. The discussions are decoupled and we see that now almost a quarter of all cars in Norway are fully electric.

Additionally, demand for gasoline and diesel is declining. This could also be a wake-up call to the global oil industry that the future may not be bright for them. Norway took its oil wealth and simply didn't spend it. We put it in the hands of the largest investor in the world, which is called Norges Bank Investment Management and owns 2% of most of the companies in the world. So we've been pretty good at thinking about those things long term. Birger Steen is the CEO of Freyr, a battery company that is part of the country's energy transition. Freyr is building a Giga Arctic factory in the northern part of Norway, as well as a battery factory outside Atlanta, Georgia.

The first application of our batteries would be in the electrical grid. Both solar and wind power plants. Our hope in the battery industry is that when it comes to the IRA, with the Inflation Reduction Act, it's actually the United States that leads the long-term thinking and what it takes to stimulate the market to make it work. better. That is why we hope that both the European governments and the Norwegian governments will do the same as the Americans. Would you say the environment is a very important part of why people buy electric vehicles here, or is it the price of the cars?

I don't think Norwegians are more concerned about the environment than other people. So economics is the most important thing. Climate emissions are of course a good bonus and also important for our small group of people. What would you say the next few years will be like in terms of getting to the final stretch of reaching the 100% goal? The rest are plug-in hybrids. Parliament has called for all benefits for these vehicles to be removed, so they will be treated like a normal petrol car in the tax system. So Norway made electric vehicles a little cheaper than gasoline ones.

But what about the load? At first he also subsidized it. At first, it was heavily subsidized. Not so much nowadays, there are some rural areas where you may be able to get some government subsidies. This has been very helpful in getting the charging infrastructure up and running. Bernt Otto Fjellestad is a project manager at Mer Norway, one of the country's largest fast charging companies. He has installed more than 35,000 fast chargers throughout Europe. Tesla is another of the largest charging companies in the country. It launched Europe's first supercharger network in Norway more than a decade ago. Did Tesla build the supercharging network before the other companies?

They have also greatly helped increase the market share of electric vehicles in Norway. We had Elon Musk visit Norway a couple of times, but of course it was only recently that they opened up their network to other cars. So now it's also been really beneficial for non-Tesla owners to use superchargers. We went on a cargo safari

while

in Norway and saw firsthand what these partnerships are like. We also met with Stian Mathisen from Recharge, one of Norway's largest charging companies with over 2,600 charging points in the country. Why do you think McDonald's agrees to collect on the spot?

Well, it's kind of interesting because suddenly they're competing with what used to be called gas stations, but now we call them power stations in Norway. And they are in a completely new market, they can sell energy for cars as well as energy for people and food. Retailers are also participating, hoping to get people to do some shopping while the car is charging. We saw a huge charging station at an Ikea in Oslo. How much did it cost to buildthis station? This particular one is so big. So it's easier to talk about smaller locations, but a smaller site might cost around the equivalent of $200,000.

But it depends a lot on how many charging points you are going to install and, especially, how much power you are going to need from the grid, because that is a big X factor. Installing the grid can be very expensive. Is Recharge a profitable company? We have investors who invested a lot of money in our company. And investment in infrastructure requires a lot of capital. We've been building a lot for over ten years, but our owners believe we're going to be a profitable company. That's why they invest in us. What would you say came first in Norway, all chargers or all electric vehicles?

Yes, chicken or egg? They are the cars that arrived first in Norway. We hardly had any support to carry. Of course, the first to act, they charged home. So, of course, that's also the most common way to fill up the tank of your electric car, charging it at home. I only charge maybe twice a month or something with fast charges. Of course, if you live in an apartment building, you may rely more on fast charging. But it is also more expensive to fast charge. So it is best to charge at home. When they started rolling out electric vehicles here, people living in apartments complained that there weren't good charging options for them.

That's why the city of Oslo has installed chargers like this throughout the city, as well as in parking lots throughout the city. Welcome to my man cave. We actually

built

it in 2017. It's a bomb shelter, and it still is, from the Cold War. 50s, but we actually converted it. Only electric vehicles are allowed here. I think it was actually the first parking lot in Europe reserved solely for electric vehicles. As you can see up to here, there are up to 86 cars that can be charged at the same time. Sture Portvik has been Oslo's Electromobility Director since 2014.

Oslo has been a European leader when it comes to electric vehicle infrastructure. It's about experimenting with parking spaces that charge the car. Converted all city buses to electric. It is working on electrifying construction machinery and semi-trailers, and has also installed more than 2,000 public chargers in the city. Who has paid for all this? The city acted as a pioneer, so we had to go out and place chargers. In those days, collecting was free, so of course the city paid a little. But now we see that now you have to pay a small user fee, and that means it's not actually the taxpayer.

It is paid through user payments, but a little over time. Oslo also electrified its ferry fleet. It is the first city in Europe where all public transport is zero emissions. That's why I love these boats. They are used by millions of passengers every year. It's charging as we speak and it takes about five minutes because it charges with 3.5 MW. And that's pretty fast, millions of watts. I'm curious: was it a challenge to install these large chargers on the docks? Definitely. The building behind us is actually a converted fishermen's office. We removed everything and now it works as a large network station to be able to provide the amount of capacity that is needed.

There are a lot of batteries and a lot of electronics. And yes, they are expensive, but the fuel itself is based on hydroelectric energy, 100% renewable and with zero emissions, and much cheaper than diesel. So, in the long run, this is also a good business case for the public transport company. How long has Norway been relying on hydropower? About 120 years or so. We are very happy to have hydroelectric energy because it works as a battery for all the other energy sources that are more variable depending on the weather, if it is sunny or windy. The wind capacity we plan to invest in in Norway will allow us to double our energy production by 2040.

How does it work with utilities when a new site is

built

? When we build a new site, we have to come to an agreement with the landowner to be able to use that location. We also need to have approval from the authorities. The electrical infrastructure in many areas is already quite overloaded, making it increasingly difficult to get the amount of electricity we need. But the network companies are working with us and we are trying to find the best solutions. Network demands will continue to increase. It's not something that has been prohibitive in any way until now.

But yes, it requires an additional investment. Yes, it will be increasingly difficult to get a network connection where we really need it. Gas stations, now called power stations in Norway, are getting involved to see the benefits of installing chargers. Is it really the gas station company, Circle K, that paid to install these chargers? Yes. Therefore, the fast charging market is more or less a fully commercial market. Circle K is one of Norway's large fast charging companies and also Norway's largest gasoline chain. Will they be able to make as much money charging as they do with gasoline?

Well, they don't make much profit on gas either. Mainly it is also the convenience store where they sell food, coffee and drinks. This is also, of course, more relevant for electric vehicle owners because when charging them, it takes longer than filling a tank of gasoline. So maybe they stay here for 20 or 30 minutes. They can also earn money there. There is a company called Certus that runs this Esso station. We have a deal with them that we split the costs 50/50 for the entire facility here, but then we also split the revenue 50/50. Gas stations are diversifying with deals like this because fuel demand from passenger cars has fallen by more than 20% in Norway since 2016.

That's why they're also installing fast chargers because they want customers, they want them to come in and buy the burgers and Coca-Colas. and things like that, because that's where the margins are. But charger reliability has been an issue. Some say that in Norway there is not range anxiety, but load anxiety. What would you say has been the biggest complaint from EV owners? There has been a charging queue and the chargers do not work. Now the market is more mature, so it is less of a problem. It still happens, but not as often. Now it is the payment systems that are the biggest pain, that you have to download an application or different payment solutions for each company.

So it can be a little confusing, especially for new EV owners. Is there a way to do it without downloading an app? We experienced charging anxiety the first time we tried to charge our rental electric vehicle. First we went to a Tesla Supercharger station near Oslo airport. In Norway, Tesla chargers are supposed to work for all EVs, but we tried several ports and couldn't get any of them to charge our car. I tried two different superchargers. These are the new v4 and I couldn't get them to work. We gave up the Tesla chargers and went to a nearby charging station.

But at first we couldn't get that to work either. I think I'll probably have to hang up the phone to download the app. Fortunately, the customer service agent spoke English and we had to download a new app to get the charger to work. The United States is making the same mistake with chargers. Each recharge company has its own applications, its own payment methods. But it has to be as easy as pouring gas to achieve mass adoption. Norway is working to improve this with regulations. Now the big problem is getting access to the load because you cannot pay with a credit card here, you have to download an application for each company.

And now, finally, we are also starting to install regular card payment terminals, such as credit card or payment terminals. We know that many people have been waiting for you. There are regulations at EU level, which means that all EU countries will have to have card payment terminals on their chargers in the future. And Norway has also put in place its own regulation, which is even stricter when it comes to the deadlines for this to happen. Once we got it running, I was pleasantly surprised at how quickly the DC fast charger filled up the car. I just finished loading.

We loaded the car to approximately 70%. It only took about 15 minutes or so. It was very fast, so it was pretty impressive. Once we got the charging working it worked great and was very fast. Very simple, in Norway it is very practical. You can charge anywhere. So we have a charger in our house. My husband can get paid at his job. I can upload it there too. Tesla launched its new fast V4 Superchargers in Norway before the US. We visited one that had just opened. What do you think of these new V4 chargers? Yes, that's amazing. Yes, that's amazing.

It goes very fast. You stay ten minutes and suddenly you have the possibility of driving two hours. That's phenomenal. It's faster than fueling your car. I am very happy with the Tesla. I save a lot of time by using Tesla, because before Tesla, the other car I drove, I used to charge three or four times a day. But now, sometimes I tend to charge once with just ten minutes of my time. This way I save a lot of time with Tesla. Anything you missed about driving a gas car? No. You see, nowadays electricity is very cheap.

And the charging network is very, very good. I often go to northern Sweden and northern Norway in the summer. My family is there. Is very good. We spent a week in Norway and there were a few moments where we felt range anxiety. We drove into the countryside and didn't see any chargers on the road. Let's hope our battery lasts because it feels a little short here. The other time we felt range anxiety was on the way back to the airport at the end of our trip. Please note for car rental companies that it should not be a requirement to return the car fully loaded.

This is not convenient for travelers who cannot charge at home. Have you ever had range anxiety? Not anymore. I used to, because I was one of the first to buy a Nissan Leaf, the first generation. And I loved that car. But of course the range was not easy. Especially in winter. I used it in the cabin and once had to recharge the battery three times with fast charging. But nowadays it's really not a problem, so don't worry anymore. Many people don't think electric vehicles are very good in winter. what do you have to say about it?

Well, they are better because you can preheat them to get to a warm car. Cozy car. Of course, the battery, when it's cold, is not as efficient. But with larger batteries now, preheated batteries, and better charging infrastructure, it's not a problem. I've heard that the battery drains faster in the cold. If that's true. Of course, you cannot travel the same number of sections. I would say that if your car goes about 400 km in the summer, it probably won't go more than 320 km in the winter. That's the way it is. But you have to plan a little more, but it's not really a problem.

How is the winter? No, very good, because it is very heavy. This way you can get to your cabin in any way. Because that was something, because my parents have a cabin, those were my main concerns that we had before driving Tesla. But since it's so heavy, it works very well. Now that it is close to its 100% adoption goal, Norway is considering making some changes to incentives. EV drivers used to have access to bus lanes, but the bus lanes became so filled with EVs that they are only now switching to EV carpooling. There are some setbacks in the current subsidies for the use of electric vehicles, especially with regard to the use of public lanes.

The discount on parking, the discount on the use of ferries and the discount on road tolls. These are being phased out and, over time, will likely be phased out because the electric vehicle is the new normal. We have this CO2 tax, but of course when you reach 80% market share, you don't sell many polluting cars and you don't get much CO2 tax. Then incentives for electric vehicles must also be reduced. But of course, technology is improving. The price of production is falling. Once again, incentives are not needed today as high as they were ten years ago. Have there been any problems with increased wear and tear on the roads as the cars are heavier?

This is more of an issue when it comes to tax breaks and such, because more and more people are arguing that electric vehicles also have to pay their fair share. When we go fully electric, of course, EVs will have to pay their fair share for road use.Have there been any problems with the batteries degrading over time? And I'm curious if there is a plan when an EV reaches the end of its useful life. Are batteries recycled here in Norway? There is a European plan for battery recycling and also some projects in Norway where batteries can be delivered.

There is a common EU regulation for battery recycling, and this is an important aspect for the way forward, because we want electric vehicles to have a long life in Norway. Norway also has a strong used EV market, and everyone we spoke to said the batteries hold up well over time. Is this a used Tesla? Yes. This is from 2014. Is there a big used EV market here in Norway? Yes. There are many electric cars. Did you buy this in 2017? Yes. Good, excellent. Yes, that's a long time. I drove 200,000 km and the battery is good, I found that there were only 3.5% kilometers left.

Nothing bad. No, that's not bad. But you have to take care of it, not charge too much. I never charge more than 80%. What would you say to someone who says that electric cars are as harmful to the environment as gasoline cars? This argument is the reason why we do not want to accelerate the transition any more than necessary. That is why we are concerned about the high sales volume. That we've been pushing cars too hard, perhaps, and that the number of cars is increasing. And we want people to use the old car for its entire useful life.

We can definitely see the different environmental aspects of car production itself. It is a consumption that has its negative aspects on the environment. We must take this into account when changing policies in the future. And like the United States, Norway also has its share of EV skeptics. We still have many skeptics regarding electric vehicles, both internationally and also in Norway. They're climate skeptics, electric vehicle skeptics. And they have many myths about electric vehicles, the risk of fire, the origin of energy, production emissions, etc. So we still have those discussions all the time, even in Norway. With all these electric vehicles, have fires been a problem?

No, we had the big fire parking lot for cars a few years ago, and there were some rumors that it was an electric car that started the fire, and then the whole media went crazy. But ultimately, it wasn't an electric vehicle that started the fire. It was an old gasoline car. But of course there were many electric vehicles parked there, but the fire did not spread to the batteries. Have there been any problems with fires? Not here, no. None at all. But of course, if an electric vehicle burns, it will burn for a long time, but it won't be explosions and things like that in a gasoline car.

Norway is about the size of New Mexico in square miles. And with a population of 5.5 million, it has a similar population to South Carolina, so it's hard to compare the United States and Norway. But there are some important conclusions. Currently, getting paid in the US, Europe and Norway is still too difficult for end users. It doesn't always work. Very often it is cumbersome. You have to run with different applications. These are things that, from the top down, in a region, in a country, can be regulated in a way that benefits the consumer without interfering with the free market environment.

Standardization is important for the industry and also for users. For DC charging, for a long, long time you had CHAdeMO, the old type of DC fast chargers. And you had CCS, like the European standard. And Tesla had his own. And now they are merging more and more and there is more and more a standard. And I think that's extremely important. What is the most important lesson you have for the United States when it comes to electric vehicles? I say go for it, but you need to have the charging infrastructure to be able to travel as far as you want, without being afraid of running out of power in the middle of nowhere.

Therefore, the government should help the charging infrastructure reach a certain level, and after a while it will be commercially viable. So make that first push and then everything will start working itself out after a while. What can Norway teach the United States when it comes to EV adoption? Well, focus on cars, for people to buy them it has to be economically beneficial. And again we are electrifying ferries, buses, everything in Norway. Now the thing is big trucks. There are still some challenges, but it looks quite promising. What mistakes have been made over the years? What are some lessons you have learned?

Well, there have been mistakes. I have to be honest about it. But I think you always have to try, but on a small scale and you have to try different technologies. If that's your approach, you're bound to make small mistakes. It's new technology. It is a new ecosystem in evolution. So there are inevitable lessons learned in that regard. So that's a bit of a progressive statement towards other countries. If you want to build a charging station, make sure the building permit is available in time. If you want to equip that charging station with enough power, make sure there is a process at the DSO level.

Then, the distribution system operator can handle such a request very quickly. And then on the technology side, keep in mind that if there are different technology providers, not all hardware, software, etc. It is a plug and play state. That's why everyone needs to come together to make it work. And that is a learning, not only in Norway, but in all the places where we build charging infrastructure. Any misconceptions about electric vehicles you want to clear up? Well, a lot of people think about electric cars and charging the same way they think about a gasoline or diesel car and putting fuel in it, and that you have to come here to our charging station to get power.

But that's not really how it works. Approximately 90% of charging is done at home, so it is not the same as having to go to a gas station to refuel your car. You usually have a fully charged car at your house in the morning and then stop to charge it with us when absolutely necessary. Anything you miss about having a gasoline car? No, not really. I have been driving an electric car for more than eight years and there is no turning back. What type of car do you have? Well, I have two cars. One is a Kia EV6, Korean, and I have a Jeep Adventure, which is also 100% electric.

So you don't have any cars that run on gasoline? Never again, I promise you.