Norway has emerged as a leading early adopter of electric vehicles. What do you see as the key drivers in Norway and can that be readily replicated elsewhere?

Norway applied a combination of support measures for EV – and has started this already in the very early days of electric mobility (early 2000s). Changing consumer behaviour takes time – considering that cars are only replace every 3-5 years on average.

Example measures: Tax and import tariff exemptions making EVs much cheaper than ICE vehicles – on the other hand high taxes on ICE, based on energy consumption. Additionally: High investments in and pressure on establishment of public charging infrastructure to support longer trips and mitigate range anxiety. Norway’s natural abundance of ‘clean’ energy from hydropower also helps by providing relatively cheap electric energy (although Norway is also rich on fossil resources) and delivering to the consumers’ aim to lower CO2 footprints in mobility.

What government actions or policies do you see as the most effective in encouraging EV take-up? And to some extent, is it about making the alternatives (ICEs) less relatively attractive?

Dr. Philipp Siedel

We have analysed consumer barriers to EV adoption. To encourage EV take-up, those barriers need to be addressed effectively. High purchase prices of EV compared to traditional vehicles is #1, doubts about usability, comfort and reliability are #2. To improve the relative price point of EVs one can either make EVs cheaper or ICE more expensive from the end-user perspective. Users or customers will probably prefer subsidies for EV to lower the absolute price points. From a legislator perspective, increasing tax burdens on ICE, e.g., by road taxes based on CO2 emissions, are more attractive. Both levers need to be well integrated into existing national or regional tax schemes and energy price levels, but both can be equally effective.

However, #2 should not be neglected: Effective measures must include the setup of a dense and available public charging infrastructure for all use cases (overnight AC and road-side HPC). To lower adoption barriers, governmental organizations and municipalities can also act as role models and push for an electrification of their own fleets (municipal fleets, service fleets, etc.). Norway also took a lead in this.

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Do you think the high price of EVs is going to remain a significant obstacle to take-up in poorer countries and what can be done to counter that?

High sticker prices for EV are often seen as a barrier, even more so in countries with lower income levels (this is why we have included macro-economic factors in GEMRIX). But one should always consider the full life-cycle costs of a vehicle or the TCO (total cost of ownership/ operation). Having better TCO due to lower running costs for energy per mile/ km and lower maintenance and service costs is what is currently driving the electrification of commercial vehicle fleets, such as delivery fleets. Talking about emerging countries, actual ADL case examples from Africa and South-East Asia have recently shown how electric vehicle TCO can be lower than ICE costs, thus improving the business cases of commercial users, such as moto-taxi or delivery service drivers. This is even possible without direct financial subsidies for vehicle purchase and mainly because of lower maintenance and energy costs.  Smart financing, renting or lease-to-own models can lower financial barriers to buy electric vehicles. Taking the costs for the battery out of the initial vehicle purchase is also an option: This implies the offering of a battery-swapping instead of charging infrastructure or effective battery rent or leasing models. For many emerging countries, electric mobility offers a unique opportunity to decrease the dependency on fossil fuel imports and to build up decentralized, renewable energy sources for mobility from solar, wind or hydropower.

What are the main challenges in the ‘starter markets’ that are late to the EV party?

Most advanced EV markets have either starting advantages from availability of green energy (Norway) or a domestic car or EV/ battery industry (e.g. China, Germany, US). Domestic production is certainly increasing acceptance for EV. Starter markets need to leverage their vehicle industry clusters (e.g. Mexico, South-Africa, Sea) for a quick transition to EV, but transforming traditional vehicle supply chains into EV supply chains is a huge challenge (see Germany/ Europe and the US). Government support can help to manage the transition and to attract investments in building up an EV battery and component ecosystem (see South-East European countries, Nordics). Some starter markets directly go for a “national car OEM” to set up a nucleus for a full EV industry (e.g. Vietnam, Turkey) or attract FDI by equity investments (e.g. KSA in Lucid).

A second important aspect is energy supply, regarding grid quality and the overall CO2/ ESG footprint of starter markets. Those are often heavily depending on fossil energy generation (India, China, …) and often lack full coverage of highly resilient energy grids. Decentral energy generation from renewables can be a solution for those countries. The transition to EV needs to go hand in hand with a reconstruction of the whole energy sector – which takes decades and requires cooperation of multiple industry sectors. Orchestrating this cooperation is a key task for governments and legislators of “starter markets”.

From a pure sustainability point of view, isn’t it better that some countries stay more tied to public transport in the overall modal mix? BYD and its electric buses spring to mind…

A clear and loud “Yes”! Electrification of vehicles should not be used to “greenwash” individual automotive mobility. The solution to emissions and congestion challenges worldwide is not to shift people into electric passenger vehicles but to electrify the full mobility sector (including public transport) as soon as possible for two reasons: 1) Studies and analyses show that EVs even operate on lower life-cycle CO2 emissions in coal- and oil-heavy countries like China, not only in Norway. 2) electrification lowers the overall consumption of primary energy because of the much higher end-to-end efficiency of the electric energy chain cp. to extracting, transporting, burning fossil fuels. Thus, changing the energy to power vehicles is one step. Increasing vehicle utilization and decreasing energy used per person and kilometre travelled with a shift to more shared and public transport is certainly another step. Both need to be taken to increase sustainability of people transport.

What are the key steps needed to get charging infrastructure ready in places where EV take-up could be high and charging capacity could act as a constraint to sales?

Charging infrastructure today needs to cover different charging use cases: e.g. slow-charging (AC) at home or at workplaces where cars are parked regularly for longer time, fast-charging at shopping or short-term parking locations, and high-power-charging along roads to replace today’s gas station model of having a short stop to repower while having a coffee or snack before continuing the journey.

EV charging has a complex value chain on its own, including e.g. energy generation or purchase, hardware installation and operation, software and customer frontend, payment and back-end services. Nowadays, vehicle-to-grid-integration adds complexity but also opportunities. Along this value chain, very different suppliers, stakeholders and players from different industries need to be coordinated and integrated to make EV charging work. Energy companies need to team up with vehicle OEM, electric component manufacturers, financial services, and software developers. Last but not lease, real estate and actual site construction plays an important role.

This requires transparent and supportive legal frameworks and incentives to invest, e.g. by reliable EV fleet ramp-ups or favourable building and energy laws. Governments and local authorities can support also by acting as consortia leads for infrastructure projects, orchestrating the different players for private investments or by leveraging public-private-partnerships. In starter markets, often infrastructure and EV sales are “waiting for the other to make the first step”. in more mature markets, this chicken-egg-problem has widely been replaced by a race: Is the infrastructure growing quickly enough to charge all the EVs sold? Increasing charge-point utilization and selecting locations to build smartly can be part of the solution. Betting more on fast (DC) instead of AC charging may be another one.

Dr. Philipp Seidel

Automotive Practice Central Europe, Member of the ADL EV and Automotive Battery Competence Center and the Automotive Sustainability Group

Dr. Philipp Seidel is a Principal in the Automotive Practice of Arthur D. Little. He advises international automotive manufacturers, suppliers and emerging players in the areas of electric mobility and mobility services.

His work focuses on the impact of new technologies and the implementation of innovation and new business models in strategic planning of automotive and mobility companies. He supports clients in developing sustainable, decarbonized transport solutions and circular approaches. This includes navigating challenges at the interfaces of traditional segments like automotive, transportation, energy, electronics, and telecom.

He has graduated with a doctoral degree and a diploma in Business Administration and International Management from WFI – Catholic University Eichstaett-Ingolstadt and holds a LL.M. with specialization in Mergers & Acquisitions from WWU Münster.