Norway has achieved the unthinkable: a staggering 98.3% of new cars sold are now electric, marking a monumental shift in the country's automotive landscape. But here's where it gets controversial—with this success, the government is now planning to phase out the very incentives that fueled this revolution. Could this bold move backfire, or is it a natural next step? Let’s dive in.
Norway’s electric vehicle (EV) dominance is no accident. For years, the government has offered generous perks to EV buyers, including exemptions from import duties, road tax, registration tax, and the hefty 25% value-added tax (VAT). These incentives have saved buyers thousands of dollars, making EVs not just an eco-friendly choice but a financially savvy one. For instance, purchasing a $59,500 EV meant paying only 25% tax on the $9,920 exceeding the $49,600 threshold, saving buyers $2,480. For a $49,600 EV, the savings soared to $12,400—one of the most attractive EV deals globally.
But this golden era might soon end. Norway’s finance minister, Jens Stoltenberg, argues that the country’s 2025 goal of all new passenger cars being electric has been achieved ahead of schedule. 'The goal has been achieved,' Stoltenberg declared, 'and the time is ripe to phase out the benefits.' The plan? Lower the VAT exemption threshold in 2026 and eliminate it entirely by 2027. This means pricier EVs, like many of the top 10 best-selling models, will no longer qualify for full exemptions, significantly increasing their cost.
And this is the part most people miss—while EVs dominate new car sales, 70% of vehicles on Norway’s roads still run on fuel. Pro-EV groups, like the Norwegian EV Association, argue that the transition is far from complete. Replacing these vehicles will take decades, if not longer. So, is Norway’s decision to phase out incentives premature, or is it a strategic move to normalize EVs without financial crutches?
Contrast this with the U.S., where the premature end of the $7,500 federal tax credit has already slowed EV adoption. Norway’s success, meanwhile, has been so rapid that officials believe the incentives are no longer necessary. But could this shift discourage buyers just as other countries, like Germany, are doubling down on EV subsidies? Germany plans to reintroduce a €4,000 ($4,675) purchase incentive in 2026, albeit with income-based eligibility. While modest compared to Norway’s perks, it’s a clear sign that many nations still see subsidies as crucial for EV growth.
Here’s the burning question: Is Norway’s move a bold step toward sustainability or a risky gamble? Will it inspire other countries to follow suit, or will it highlight the need for continued incentives? Let us know your thoughts in the comments below. And while you’re at it, take our 3-minute survey to help shape the future of InsideEVs.com! The InsideEVs team is eager to hear from you.
