• Electric vehicles accounted for 95.9 percent of all new car registrations in Norway in 2025, rising to almost 98 percent in December, placing the country far ahead of global peers.
• A mix of targeted tax relief for low cost electric vehicles and rising charges on petrol and diesel cars has reshaped consumer demand and manufacturer strategy.
• Norway’s approach contrasts with the wider European Union, where weaker demand has prompted a rollback of the planned 2035 ban on internal combustion engine vehicles.

Nearly every new car registered in Norway last year ran on batteries, not petrol. Official figures released on Friday show that electric vehicles made up 95.9 percent of new car sales in 2025, cementing Norway’s position as the world’s most advanced market for phasing out fossil fuel passenger vehicles.

The data from the Norwegian Road Federation highlights the speed of the transition. Electric vehicle penetration rose from 88.9 percent in 2024 and surged to almost 98 percent in December, as buyers and manufacturers rushed to lock in purchases before higher taxes took effect.

Policy Design Drives Consumer Behavior

Norway’s success rests on a long running policy mix that combines incentives for electric vehicles with steadily rising costs for petrol and diesel cars. While the country began introducing taxes on electric vehicles in 2023, it has simultaneously increased charges on internal combustion engine models to tilt the economics decisively toward zero emission options.

Christina Bu, head of the Norwegian EV Association, said the balance between incentive and penalty is often misunderstood abroad.

“That is often misunderstood outside of Norway, they all think it is about tax exemptions and incentives, but it is very much also about the whip,” Bu said. “ICE cars are taxed out of business in a way.”

This approach has narrowed the role of fossil fuel vehicles to niche uses. The few non electric cars registered in 2025 were largely specialist models such as wheelchair accessible vehicles, emergency response cars, a small number of hybrids, and high performance sports cars.

Tesla Leads as Market Scales

Tesla remained Norway’s top selling car brand for the fifth consecutive year, capturing a 19.1 percent market share. Volkswagen followed with 13.3 percent, while Volvo Cars accounted for 7.8 percent of registrations.

Driven by the mass market Model Y, Tesla sold 27,621 vehicles in Norway in 2025. That figure represents the highest annual sales total ever achieved by a single automaker in the country. The performance stands out given ongoing consumer backlash against the brand in other parts of Europe linked to chief executive Elon Musk’s political positions and his support for United States President Donald Trump.

Manufacturers also adjusted supply chains to respond to policy driven demand. Ford Norway Managing Director Per Gunnar Berg said the industry moved quickly to beat the new tax thresholds.

“What we did very quickly was to redirect a number of cars that were not originally intended for Norway, to get them here faster,” Berg told Reuters.

Tax Shifts Shape the Next Phase

In October, Norway announced that it would add up to 5,000 US dollars in value added tax per electric vehicle from January 1. The move triggered a year end surge in registrations. However, electric vehicles priced below 300,000 Norwegian crowns, or roughly 30,000 US dollars, will remain exempt from value added tax in 2026.

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Industry leaders say this could reshape the market once again. Berg expects the tax structure to encourage a return of smaller vehicles.

“I think the tax changes will accelerate the return of compact cars, which used to dominate both Norway and Europe,” he said.

Ulf Tore Hekneby, head of Harald A Moller, which imports Volkswagen, Audi, Skoda, and CUPRA vehicles, said electric models would increasingly replace combustion engine launches.

“There will be a great deal of new launches from our brands for compact cars so we will get a new lineup that we have not had in many years,” Hekneby said.

A Stark Contrast With Europe

Norway’s trajectory diverges sharply from the rest of Europe. Weak electric vehicle demand elsewhere has pushed the European Union to reverse its planned 2035 ban on internal combustion engine cars. For investors and policymakers, Norway offers a clear case study in how sustained regulatory pressure, not just consumer subsidies, can rapidly realign markets.

For the C suite, the message is direct. Clear policy signals, credible tax frameworks, and long term consistency can reshape entire industries. Norway’s experience suggests that electric vehicle adoption at scale is not constrained by consumer readiness alone, but by the willingness of governments to make fossil fuel options economically unviable.

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