Norway rolls back EV incentives while boosting walking and cycling

While life may soon start to feel a little less sweet for EV owners in Norway, the country is eyeing its next strategic move toward an even greener future, and that means fewer private cars (even electric varieties) clogging the roads in favor of walking, cycling, and taking the bus.

Norway is leading the world in electric car adoption, with more than 65% of new passenger cars sold in the country in 2021 being electric – and generous tax incentives and perks like free parking have played no small role in that. But the government just announced a new plan to roll back VAT exemptions, especially for higher-end vehicles, with an eye toward potentially slashing more benefits.

First up is the VAT exemption for EVs priced at more than 500,000 kroner (about $51,700) as of January 1, 2023. The new VAT scheme will be dynamic in that the more expensive the electric car, the higher the VAT fee it incurs from next year.

Norwegian news outlet The Local postulates that an EV priced at more than 600,000 kroner ($62,000) would be charged a VAT of 25,000 kroner ($2,580) or around 4%. An electric car priced near the 1 million kroner mark ($103,000) could incur up to a 12.5% VAT – which to this France-based reporter seems perfectly reasonable. Note that the standard  VAT in Norway is 25%, which is already on the high end compared to the European average of 21%.

Norway already has a goal in place of reducing fossil fuel-burning vehicle sales to zero by 2025 – 10 years earlier than the plan set by the European Parliament last week. But Norway says it isn’t hoping to simply replace combustion engines with electric counterparts 1:1 but motivate people to get out of their private vehicles and walk, cycle, and take public transport, the latter which was particularly hit hard by the COVID-19 pandemic.

EV owners in Norway have long enjoyed a range of enticing perks over fossil fuel car owners, from reduced road tolls to driving in bus lanes to free parking, in addition to no purchase or import taxes – and while some of this has already been scaled back due to the huge growth in electric car ownership, the government in taking another hard look in hopes of bumping up public transportation usage and reducing traffic, especially in and around cities. Still, no official plan has been released just yet.

Norwegian Transport Minister Jon-Ivar Nygard said in the statement:

Electric cars give us greener transport, but they also have a clear intermodal competition with public transport in urban areas. We must make it more attractive to travel by public transport, cycle, and walk.

Of course, the Norwegian Electric Car Association, which represents 110,000 EV owners in the country, isn’t happy with the new VAT measures. Christine Bu, the association’s general secretary, told Norwegian media outlet NRK:

The entire electric car policy is at stake. It’s an incomprehensibly bad idea.

Electrek’s Take

Norway is well on pace to meet its all-electric goals by 2025, and while that’s exciting, the country looks ready to take the next step in making cities, in particular, more livable, safer, while reducing electricity demands and traffic accidents overall. Fewer cars on the road is the only way forward. While more Norwegians than ever before are driving electric vehicles, they are also driving more miles than ever before. In fact, half of European car journeys are less than three miles – the kind of distance that for a majority of people is doable by bike, bus, or a brisk walk. Plus with Norway offering so many bonus perks, like EVs cruising down bus lanes (which really should be reserved for actual buses) to free parking (which then creates more demand for parking spaces in lieu of urban parks or green spaces), driving becomes an “easy” choice. But cities congested with cars and unrestrained car usage isn’t the utopian future we’re all dreaming of – and Norway is posed once again to lead the charge with a vision of what’s next after a full electric transition takes place. I think we can all agree that the world would be a lot nicer with fewer cars and more bikes, safe walking and cycling paths, and efficient buses.