By 2025, thanks to the economic benefits of electric cars, Norway will ban the sale of combustion engine cars and UK GDP will rise by £24bn

February 17, 2021
Energy
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Image Source: https://theeconoblog.com/

Norway’s fossil-fuel heritage has finally been torn down

The economic benefits of electric cars within Norway have increased drastically in recent years and will continue to do so due to the rapid rise in the production of electric cars – Norway is now the only country in the world to sell more electric cars (54%) than petrol/diesel fuel cars (46%).

In 2016, Norway had set a target to ban the sale of all internal combustion engine vehicles by 2025.

And despite the other challenges it will most likely face in the near future such as the halt in the production of electric cars during the height of the Covid-19 pandemic, Norway is well on track to achieve its goal.

Norway’s past growth was built around its high access to fossil fuels. This largely successful switch in energy use made by the country should act as an example to other countries hoping to do the same.

The economic benefits of electric cars within Norway have come about from decades of government support towards investment in electric vehicle infrastructure and cuts in road tax rates too.

Government support since 1990 towards setting up a well-organised charging network has also helped influence private sector investment in the electric vehicle industry.

As of January 2021, Norway has over 330,000 electric vehicles and 3,200 electric cars that can all fast-charge simultaneously.

The extensive fast-charging network has encouraged more consumers to purchase electric cars because the previous common assumption of fast-charging stations being in short supply has been proven wrong.

As a result, the negative environmental externalities that come from the usage of transport within Norway will continue to decrease whilst the economic benefits of electric cars continues to climb.

The expanding electric vehicle market

Major manufacturers are aiming to create further pressure on Tesla within the electric car market through much heavier investments in the near future. Volkswagen, for example, has pledged to invest over £65bn in the next 5 years and is working on 70 new electric car models.

Mercedes is another company that has plans to reduce CO2 emissions and benefit the environment through producing electric vehicles.

Presently, the company is in the process of replacing the currently used lithium-powered battery as well as also planning to use silicon anodes instead of carbon anodes in order to reduce CO2 emissions and raise electric vehicle mileage by around 20%.

The drastic rise in the supply of electric cars in the near future will play a large role in lowering prices which in turn shall create a larger incentive for more consumers to purchase these vehicles over petrol/diesel fuel cars.

The future goal for electric vehicles

Battery Development

A future goal regarding electric vehicles is for manufacturers to develop batteries with solid-state technology.

This will help with vehicle weight reduction and it is predicted that efficiency will rise by around 35% as a result.

It is likely that the most significant developments in weight reduction and efficiency will occur after lithium-sulphur batteries enter the electric vehicle market – this may start to happen in the early 2030s.

Maximising the economic benefits of electric cars

For the economic benefits of electric cars to be maximised, the costs of production must be equal to that of conventional vehicles.

An expansion of the electric vehicle market will certainly help and this is may occur in 2024 if Apple and Hyundai possibly enter the industry together and compete with Tesla.

A rise in competition will raise the economic benefits of electric cars and require existing firms such as Tesla to lower their production costs/prices which in turn will increase consumer surplus and the productive potential of the electric vehicle industry.

Arguably the biggest challenge in decreasing the costs of production for electric cars is to produce cheaper and more efficient batteries so that the economic benefits of electric cars can be increased even further.

Eliminating some of the benefits of owning an electric car, such as receiving federal tax credit between $2500-7500 after purchasing one within the USA, and setting new tax rates for electric vehicles will need to follow as well once there is a high proportion of drivers owning electric vehicles.

As seen with the Tesla stock market spike, investors believe that electric cars will be the future of the automotive industry, but, the question now is which manufacturer will dominate the future market and reap the most benefits?

Story Source: https://theeconoblog.com/economic-benefits-of-electric-cars-in-future/

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