After it achieved a record 98.3% EV adoption rate last month, Norway is now planning to eliminate subsidies on electric vehicles.
Norway, one of the wealthiest countries in the world thanks to its oil and gas reserves in the North Sea, set an ambitious target of having all new vehicles sold by the end of 2025 to be fully electric or hybrid.
Year to date, fully electric models account for 95% of all new passenger-car sales, compared with 88.2% in the same period of 2024.
“We can say that the goal has been achieved,” Finance Minister Jens Stoltenberg stated on Wednesday, adding that “the time is ripe to phase out the benefits,” as seen in the Government’s proposal for next year’s budget.
Norway offers several incentives to encourage customers to choose EVs, including exemptions from VAT (value added tax), discounts on road and parking taxes, and access to bus lanes.
After years of tax exemption on EV purchases, that cost the state billions of dollars annually, Norway introduced in 2023 a 25% value-added tax on EVs priced over 500,000 NOK ($49,500).
In the following two years, however, the Government is planning to lower its EV tax exemption to 300,000 NOK ($29,700).
At the same time, it plans to begin collecting VAT on several versions of mid-market vehicles, such as the Tesla Model Y and Volkswagen ID.4.
Norway’s executive aims for the VAT exemption to be removed by 2027.
Despite removing these incentives on EV purchases, the Government is still aligned with its zero-emission strategy.
Therefore, it plans to increase the one-time levy charged at the point of initial registration for ICE (internal combustion engine) powered vehicles.
Last month, only 25 petrol cars and 105 diesel models were sold, in a total of 14,329 vehicles — representing 0.2% and 0.7% of the market, respectively.
However, the Norwegian EV Association raised concerns on the Government’s plans, considering them to be too sudden.
“I worry that sudden and major changes will make more people choose fossil-fuel cars again, and I think everyone agrees that we don’t want to go back there,” Christina Bu, the association’s head, said on Wednesday.
Seven out of 10 cars on Norway’s roads are still fossil-fuel vehicles, according to the association, despite the country now listing more electric models in its car market than fossil-fuel and hybrid models.
Currently, there are 177 different electric car models for sale in Norway, compared with 148 internal combustion engine models, including petrol, diesel, hybrids, and plug-ins.
Bu attributes this to a long-standing, consistent EV policy that made electric vehicles affordable and appealing to consumers sooner than in most countries.
In Europe, the ban of petrol-powered vehicles by 2035 is being challenged by several automakers.
Executives from brands such as Mercedes-Benz, BMW or Stellantis have recently urged EU policymakers to overturn the regulation.
Ola Källenius, CEO of Mercedes-Benz and President of the European Automobile Manufacturers’ Association (ACEA), called for a “reality check” in the Old Continent, adding that its auto market could “collapse” in the near future.
Last month, Polestar‘s CEO Michael Lohscheller opposed to his peers, responding to several complaints that Europe’s EV infrastructure is not ready that “customers have access to 1 million charging points.”
“How many do you need? 50 million? 100 million? 300 million?,” Lohscheller questioned, ironically adding, “I mean, come on.”
