Norwegian EV policy

Norway is leading the way for a transition to zero emission in transport.

The Norwegian success story is first and foremost due to a substantial package of incentives developed to promote zero-emission vehicles into the market. The incentives have been gradually introduced by different governments and broad coalitions of parties since the early 1990s to speed up the transition.

The Norwegian Parliament has decided on a national goal that all new cars sold by 2025 should be zero-emission (electric or hydrogen). By the end of 2020, there were more than 330.000 registered battery electric cars (BEVs) in Norway. Battery electric vehicles held a 54 % market share in 2020. The speed of the transition is closely related to policy instruments and a wide range of incentives.

The current Government has decided to keep the incentives for zero-emission cars until the end of 2021. After 2021 the incentives will be revised and adjusted parallel with the market development. The VAT exemption for zero-emission vehicles in Norway has been approved by the EFTA Surveillance Authority (ESA) until the end of 2022.

The 50 % rule

Since 2017 it has been up to the local governments to decide the incentives regarding access to bus lanes and free municipal parking. The Parliament has agreed on implementing a 50 % rule, which means that counties and municipalities can not charge more than 50 % of the price for fossil fuel cars on ferries, public parking and toll roads. The 50 % rule is already in function on county ferries and state ferries but will also be implemented on toll roads in the course of 2019. A rule of maximum 50 % parking fee at public parking for zero-emission cars is expected to be implemented by many municipalities from 2019.

Charging infrastructure

For longer distance trips, a well-organized charging network has to be in place. As of January 2021, we have more than 330.000 EV’s and 3.200 cars that can fast-charge at the same time. Even if EV owners are charging at home and manage without fast charging daily, they think it is essential to have the option to fast charge when needed.

Consumers are willing to pay a higher price for the service of fast charging. On average three times more than they pay for electricity at home.

By 2017 the Norwegian Government launched a program to finance the establishment of at least two multi-standard fast charging stations every 50 km on all main roads in Norway.There has successfully been established fast charging stations on all main roads in Norway.

The Norwegian car tax system

The overall signal from the majority of political parties is that it should always be economically beneficial to choose zero and low emission cars over high emission cars. This is obtained with «the polluter pays principle» in the car tax system. High taxes for high emission cars and lower taxes for low and zero-emission cars. Introducing taxes on polluting cars can finance incentives for zero-emission cars without any loss in revenues.

The Norwegian Parliament has decided on a goal that all new cars sold by 2025 should be zero (battery electric or hydrogen) emission vehicles. This is a very ambitious but feasible goal with the right policy measures. The Parliament will reach this goal with a strengthened green tax system, not a ban.

The purchase tax for all new cars is calculated by a combination of weight, CO2 and NOx emissions. The tax is progressive, making big cars with high emissions very expensive. For the last years, the purchase tax has been adjusted gradually to have more emphasis on emissions and less on weight.

The following example compares an EV model with a similar petrol model to illustrate how the Norwegian tax system makes EVs competitive in the market.

The Norwegian EV incentives:

  • No purchase/import taxes (1990-)
  • Exemption from 25% VAT on purchase (2001-)
  • No annual road tax (1996-2021). Reduced tax from 2021.
  • No charges on toll roads or ferries (1997- 2017).
  • Maximum 50% of the total amount on ferry fares for electric vehicles (2018-)
  • Maximum 50% of the total amount on toll roads (2019)
  • Free municipal parking (1999- 2017)
  • Parking fee for EVs was introduced locally with an upper limit of a maximum 50% of the full price (2018-)
  • Access to bus lanes (2005-).
  • New rules allow local authorities to limit the access to only include EVs that carry one or more passengers (2016)
  • 50 % reduced company car tax (2000-2018).
  • Company car tax reduction reduced to 40% (2018-)
  • Exemption from 25% VAT on leasing (2015)
  • Fiscal compensation for the scrapping of fossil vans when converting to a zero-emission van (2018)

Volkswagen Golf vs. e-Golf

The progressive tax system makes most EV models cheaper to buy compared to a similar petrol model, even if the import price for EVs are much higher. This is the main reason why the Norwegian EV market is so successful compared to any other country.

Norwegian EV policy history