Data from the Norwegian Road Federation (OFV) has revealed that nearly 4 out of every 5 cars sold in 2022 were battery-electric. The sales of battery electric vehicles (BEV) rose from 65% in 2021 to 79.3% in 2022. With a population of about 5.5 million, Norway is on track to becoming the first country in the world to totally phase out internal combustion engine vehicles.
Leading the sales numbers was Tesla EVs. The EV giant sold more cars in Norway compared to every other brand. With 12.2% of the overall market sales, Tesla has become the highest-selling EV in the country for two straight years now. The most popular brand of 2022 was Tesla Model Y.
Trailing closely behind was Volkswagen with 11.6% of market shares. Volkswagen’s ID.4 was the second most popular brand in the country for 2022 while Skoda Enyaq placed third.
“The preference of fully electric by 8 out of 10 people in Norway is a significant step towards reaching the climate goal of 100% BEV sales in 2025,” said the Secretary General of the Norwegian Electric Vehicle Association, Christina Bu.
The success of mobility electrification in Norway is partly due to generous government subsidies. Automakers have leveraged the subsidies to launch their EV brands into the market. With the government planning to end the subsidies, there are concerns that the gains may be reversed.
Norway’s strategy to end the sale of diesel and petrol cars by 2025
To achieve the lofty plan of ending the sale of ICE-powered vehicles by 2025, the Norwegian government exempted BEVs from taxes that owners of ICE-powered vehicles were mandated to pay.
“Our message to the rest of the world is clear,” Bu said, “there is no more excuse to keep ICEs and their unnecessary pollution, especially at a time when the world is urgently fighting the climate crisis.”
Although the tax holiday has proved effective in dictating the choice of new vehicle owners, it has been costly to the government.
According to the finance ministry, the tax holiday on EVs cost the country 39.4 billion crowns ($4 billion) in 2022. To make up for the revenue shortfall, the center-left coalition government is looking for ways to slice tax exemptions for high-end vehicles.
Putting it into context, drivers that purchased the electric Porsche Turbo S in 2022 would have paid nothing less than 1.7 million Norwegian crowns. However, if the same tax as ICE-powered vehicles was applied to the electric Porsche Turbo S, the price would have shot up beyond $2.1 million crowns.
It is not surprising that the sales of BEVs in Norway surged to a record 82.8% in December. Most families scampered to get theirs before the implementation of the new tax regime in 2023. From 1 January, the hitherto 25% sales tax exemption on the purchase of new EVs will only apply to the first 500,000 Kroner (around $50,500) of the price.
A tax alternative based on weight may reverse electrification gains
In the race to curb carbon emissions, subsidies have helped to fast-track EV adoption in Norway. However, as BEVs become more popular, subsidies were no longer sustainable. Owing to dwindling revenue, the government is considering a new tax regime based on vehicle weight.
Analysts are concerned that the implementation of such a policy will make ICE-powered vehicles more attractive since they are usually lighter than BEV equivalent said the Norwegian Automobile Federation (NAF), an interest group speaking on behalf of vehicle owners.
Thor Egil Braadland, the NAF spokesperson said; “Our concern is that the newly proposed tax based on weight will lead to a drop in BEV sales”.
The end of the tax holiday is not the only obstacle on the path of EV adoption. Braadland believes more people will choose BEVs if they were more charging stations and more efficient payment systems for using the charging stations.
“You need 10 to 15 apps to truly get ready as an EV driver in Norway,” Braadland said. “Many people are delaying their EV purchase due to these issues.”
NAF is pursuing an ‘e-roaming’ solution that will allow EV owners to make payments for using the charging station through one app rather than having to cycle through numerous apps.
In response to the criticism of the tax based on weight, a state secretary at Norway’s transport ministry, Johan Vasara of Labor said: “EVs are becoming the new normal. They have come to stay. Therefore, we have to review how we spend society’s funds.”
