EV tax incentives in Norway may be abolished

Norway started the EV revolution with an earthquake - dropping VAT on new electric cars, introducing toll discounts, offering free parking among other incentives, just to convince people to move away from ICE vehicles. It worked - Norway has the highest number of EV vehicles per capita and is the fastest transitioning country in the world. What the planners were hoping for, as it turns out, was that people would stop using cars altogether or at least use them less, even the new shiny electric ones. What they did not expect is to become victims of their own success.

Norwegians took advantage of the new rules and dropped the ICE cars as if they were hot coals and they turned to EVs. And they bought a lot. So much in fact that the hopes of reducing traffic were dashed with everyone realizing that the situation got even worse - sure, no more pollution but the traffic is even more. Transport Minister of Norway, Jon-Ivar Nygard said “it’s great that people use electric cars, but it’s not good if they drive to busy urban areas instead of walking, cycling or using public transport”.

The Government of Norway clearly forgot that we, the people, will not walk when we can drive. All the tax incentives backfired badly with much lower revenues for the government and traffic situation without much improvement.

How much money are we talking about? To start off, there’s no VAT on new electric cars in Norway which means 25 percent saving compared to ICE vehicles. Then there’s vehicle tax which is half for EVs compared to diesel or petrol cars, road tolls and parking fees are either lower or free in some places for EVs. No surprise then that electric cars are the transport of choice for Norwegians, but the Government is starting to feel the pinch and apparently is running short on money for infrastructure projects or public transport improvements.

Is it true though? The numbers can be confusing because despite the majority of new cars sold being EVs, still 80 percent of all cars in Norway run on dinosaur juice. Sure these cars already have the VAT paid but the owners still pay vehicle tax and fuel tax to the tune of millions of Krones every year. Or is the EV revolution really that bad and the Government of Norway has a legitimate reason to worry? Or is the demise of fossil fueled cars so bad and so quick that oil companies are panicking and using every trick they have at their disposal to try and lobby the Government to change the policies that are hurting their profits?

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