Norway, a global leader in electric vehicle adoption, plans to phase out its extensive EV subsidies, signaling a shift in policy as the nation has already largely achieved its ambitious electrification goals.
The Labour government’s 2026 budget proposal outlines a significant reduction in financial incentives, moving to decrease the price threshold for new electric vehicles subject to value-added tax (VAT). This threshold would drop from the current 500,000 Norwegian Krone (approximately $45,600 USD) to 300,000 Norwegian Krone (approximately $27,400 USD).
By 2027, the government aims to entirely abolish the VAT exemption for electric vehicles, which currently stand at 25% for other car purchases.
Finance Minister Jens Stoltenberg stated it is “time to eliminate the incentives,” citing the country’s rapid adoption rate. He noted that electric vehicles now comprise 95% of new car registrations this year, effectively meeting the 2025 electrification target ahead of schedule.
The government maintains that zero-emission vehicles will remain financially attractive even without subsidies. This is partly due to a planned increase in a one-time purchase tax on fossil fuel-powered vehicles.
Despite being Europe’s largest oil producer outside Russia, Norway has aggressively championed EV adoption. Electric vehicles accounted for over 98% of new registrations in September, contributing to the 95% average share for new cars since the beginning of the year.
The proposed policy shift has drawn criticism. Christina Bu, Secretary-General of the Norwegian Electric Vehicle Association, told broadcaster TV2 that the changes would “significantly increase the price of electric cars,” affecting both new and used models.
Bu described the proposal as “very bad news for climate policy.” She advocated for a more gradual removal of the subsidies to ensure continued market stability and affordability.
The Labour government operates as a minority in parliament. Its budget proposal, including the EV incentive changes, will require approval from its coalition partners to pass into law.