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Electric Vehicles in Norway

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Electric Vehicles in Norway Management of Innovation and Business Development Copenhagen Business School, 2014 Electric vehicles in Norway A qualitative study of the electric vehicle market in Norway Ida Furnes Breivik Malin Olsson Volder Supervised by: Merrill Jones Barradale, Department of Intercultural Communication and Management Completion date: August 27, 2014 Number of total pages: 137 Number of pages*: 122 *Excluding Cover, Declaration, Acknowledgements, Bibliography and Appendices Total number of characters*: 253.404 (average/page: ~2094) *Including spaces; excluding tables and figures Acknowledgements This master’s thesis symbolizes a truly signifying accomplishment in our academic careers. Our thesis represents hard work, laughter, countless discussions, agreements and disagreements. However, we could not have done this without support. We would like to express a particular thank you and gratitude to our supervisor, Merrill Jones Barradale, for being supportive, inspiring and patient in her guidance. We would also like to thank all the individuals who agreed to be interviewed and shared their experience, thoughts and knowledge. We would like to say thank you for the love and support from our families and friends who has made this road brighter and lighter. Your support has been invaluable. Ida Furnes Breivik and Malin Olsson Volder Abstract The Norwegian Government has set a goal stating that by 2020, emissions from new passenger cars shall not exceed an average of 85 gram CO2/km. To meet the goal the Government is dependent on a large amount of EVs1 in the national vehicle fleet. In this thesis we will use theory on path dependence (PD) and socio-technical transitions (STT) to examine what the Norwegian Government should do to support the emergence of EVs as an alternative to the ICE2. The Norwegian EV policy, with its many incentives, is said to be the world’s most favorable. EVs are exempt from all non-recurring vehicle fees, including purchase taxes and 25 percent VAT on purchase. Modifying the extensive EV incentives, as the adoption rate of EVs increases, may be a major challenge. The incentive scheme is applicable until 2017; however there is considerable uncertainty about what will happen with the EV incentives after 2017. The success of the EV in Norway brings substantial costs for the Government, which has been the center of a series of public debates. This debate caught our attention and we started our research journey with the aim to identify what the Norwegian Government should do if they want the EV market in Norway to become sustainable. In this thesis we have conducted an in-depth analysis of the Norwegian EV market and more 20 interviews with central industry actors, policy makers, and EV owners. Our results show that the Government must introduce a long-term plan for the incentive package that extends beyond 2017. The financial incentives have major influence and should be extended until EVs are price competitive, which we argue will happen in 2020. Furthermore, a modification of the operating incentives should be introduced. Additionally, the development of charging infrastructure, mostly fast charging, needs to keep up with the number of EVs on the market. We believe the Government should look further into the challenge of free charging and lack of standard points and plugs in order to enhance the development of the charging infrastructure and create a sustainable EV market. KEY WORDS: Electric Vehicle (EV), Norway, Grounded Theory, Path Dependence, Socio Technical Transitions, Multi Level Perspective (MLP) 1 Electric Vehicles 2 ICE = Internal Combustion Engine – we will use the term ICE for cars that have an internal combustion engine 1 Table of Contents 1. Introduction and motivation .........................................................................................................................7 1.1 Research question .........................................................................................................................................9 1.2 Scope and delimitations ..................................................................................................................................9 1.3 Thesis structure guide ................................................................................................................................11 2. Background: Understanding the EV market ..........................................................................................13 2.1 History of the EV in the global context .....................................................................................................13 2.2 EVs in the European market - Pilot and demonstration projects ..........................................................14 2.3 History of the EV in the Norwegian market ............................................................................................15 2.4 The incentive scheme ..................................................................................................................................17 2.5 Climate actions ............................................................................................................................................21 2.5.1 The Kyoto Protocol ...............................................................................................................................22 2.5.2 The European Union – Climate and transport policy ............................................................................22 2.5.3 The EU’s policy impact on Norwegian policy - The EEA Agreement .................................................24 2.5.4 Climate policy goals for Norwegian transport .......................................................................................25 2.2.6 Climate agreement and the White Paper ...............................................................................................25 2.2.7 Transnova ..............................................................................................................................................27 2.6 The legislative system in Norway ..............................................................................................................28 2.6.1 Structure of the Norwegian Government ...............................................................................................28 2.6.2 Counties and municipalities ...................................................................................................................30 2.6.3 Non-governmental organizations and lobbying organizations ..............................................................31 3. Methodology ...................................................................................................................................................32 3.1 Philosophical choice, approach, purpose and strategy ............................................................................32 3.1.1 Philosophical choice ..............................................................................................................................32 3.1.2 Research approach and purpose ............................................................................................................33 3.1.3 Research Strategy ..................................................................................................................................34 3.2 The Data Collection Process ......................................................................................................................35 3.2.1 Collection of Secondary Data ................................................................................................................36 3.2.2 Collection of Primary Data ....................................................................................................................37 4. Literature review and theoretical framework ........................................................................................42 4.1 Literature review ........................................................................................................................................42 2 4.1.1 EVs ........................................................................................................................................................42 4.1.2 Path dependence ....................................................................................................................................43 4.1.3 Socio-technical transitions .....................................................................................................................44 4.2 Theoretical framework...............................................................................................................................45 4.2.1 Path dependence ....................................................................................................................................45 4.2.2 Socio-technical transitions .....................................................................................................................48 5. Analysis and results ......................................................................................................................................56 5.1 Path dependence and the evolution of the automobile market ...............................................................57 5.2 Empirical evidence from a series of actor interviews and secondary data research ............................60 5.2.1 Policy incentives for EV end users .....................................................................................................60
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