Tax gap between electric cars and combustion engines grows in Norway

The majority of MPs in the Norwegian parliament passed the budget for 2025 at the weekend. This makes it clear that the VAT exemption for electric cars that already applies in Norway will remain in place next year. The plan is to keep it until 2026. The exemption applies to electric cars with a price of up to 500,000 Norwegian kroner, the equivalent of just under 43,000 euros.

Meanwhile, taxes for new cars with combustion engines will be increased from 1 April 2025 – by an average of over NOK 45,000 (around EUR 3,850) for plug-in hybrids and by an average of NOK 14,500 (around EUR 1,240) for all other cars with combustion engines. This makes sales of non-electrified or not fully electrified cars, which are already in sharp decline in Norway, even less attractive. Their share of registrations has been in the low single-digit range for months. Battery-electric cars, on the other hand, achieved a market share of 93.6 per cent in November, for example.

‘It is important to the government that ordinary families in Norway can afford to buy a car. We will therefore continue to use the opportunities offered by the EEA Agreement to ensure that Norway’s successful electric car policy can be continued in the coming years,’ says Finance Minister Trygve Slagsvold Vedum from the governing party Sp (Centre Party).

In addition to the governing parties, the MPs from the Socialist Left Party (SV) also support this tax policy. “With this adjustment, we are making it possible for Norway to become the first country in the world with 100 per cent zero-emission new car sales, which will be an international sensation in terms of the climate. And that is exactly where SV wants to be in climate policy,” said Lars Haltbrekken from SV.

The Norwegian Electric Car Association (‘Norsk Elbilforening’) also praises the decision: “With this agreement on the budget, we are taking another step towards zero emissions in Norwegian new car sales. The share of electric cars among passenger cars will be almost 100 per cent by 2025,” says Christina Bu, Secretary General of the Norwegian Electric Car Association, with conviction.

Only when it comes to electric vans is the turnaround in Norway slower than expected. The Norwegian Environmental Protection Agency and the National Public Roads Administration therefore recently proposed defining a new climate target for vans: The new deadline, after which only zero-emission new vans may be sold, should no longer be 2025, but 2027. However, this has not yet been finalised.

One thing is clear: the government also wants to achieve a steering effect in this area by increasing taxes. The budget agreement for 2025 therefore provides for a tax increase for new polluting vans, although this will be much lower than for cars. The average increase for vans with combustion engines is only around NOK 8,500, the equivalent of around EUR 730.

elbil.no, regjeringen.no (both in Norwegian)