Almost no combustion engine cars are sold in Norway anymore
The Norwegian government achieved its goal that by 2025 almost no combustion engine cars will be registered. Now subsidies for e-cars are to be phased out.
Electric car at a charging station with a Norwegian flag
(Image: AS photo family/ Shutterstock.com)
Norway is the flagship country for electromobility. Combustion engine cars now play virtually no role there anymore. “We had the goal that all new passenger cars should be electric by 2025,” said Norwegian Finance Minister Jens Stoltenberg, according to the British news agency Reuters. “We can say that this goal has been achieved.”
Diesel and gasoline-powered vehicles are clearly in the minority among new registrations; their share this year is in the low single-digit percentage range.
Subsidized Electromobility
One reason for the success of electric cars in the Scandinavian country is the generous subsidies. For example, when buying an electric car, the tax, which depends on the emissions and weight of the car as well as the value-added tax, is waived. In addition, electric cars can use toll roads and tunnels free of charge.
Correspondingly, electric cars in Norway were not pricier or even cheaper than combustion engine cars. In addition, electricity is cheap in Norway, while fossil fuels—even though oil and gas are produced there in large quantities—are expensive.
Now that the goal has been reached, the subsidies are to be phased out, as the Ministry of Finance announced. Since 2023, the government has already been levying value-added tax on more expensive electric cars, with a purchase price of 500,000 Norwegian kroner (equivalent to just under 42,600 euros).
Value-added tax on further electric cars
Next year, the threshold is to be lowered further. Then, for electric cars, value-added tax will be due from a price of 300,000 Norwegian kroner, or about 25,500 euros. In 2027, the VAT exemption is to be completely abolished, provided that the members of parliament approve the government's plans, which do not have a majority in parliament.
“The gradual phasing out of benefits for electric vehicles gives us the opportunity to lower other taxes and levies,” said Stoltenberg. This corresponds to the government's tax promise that if certain taxes are increased, others would be lowered.
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Criticism of subsidy reduction
Criticism of the plans comes from Norsk Elbilforening (Elbil), the association of Norwegian electric car owners. The government's plans envisage levying 50,000 kroner (just under 4,300 euros) on electric cars next year and another 75,000 kroner (just under 6,400 euros) the year after, for a total of 75,000 kroner (just over 10,600 euros). “This is a larger tax increase than has ever been introduced for combustion engine vehicles, and terribly bad climate policy,” said Elbil chairwoman Christina Bu.
This will drive up prices, including for used vehicles, and disadvantage lower-income households that rely on a car. Ultimately, this could even lead to a return of combustion engines: “The car market is extremely sensitive to tax changes. I fear that due to sudden, large changes, more people will opt for combustion engine vehicles again, and I believe we all agree that we don't want to go back there,” said Bu. According to Elbil, about 70 percent of cars registered in Norway are still combustion engine vehicles.
Stoltenberg estimates the VAT benefits for electric cars at 17.5 billion kroner, just under 1.5 billion euros.
(wpl)
