Why owning an electric car in Norway could become more expensive

Norway’s transport ministry says it is considering scrapping or reducing tax discounts for electric vehicles.

electric cars charging
Norway's government is considering reducing discounts for electric cars. Illustration photo: JUSTIN SULLIVAN / GETTY IMAGES NORTH AMERICA / Getty Images via AFP

Tax and toll deductions for electric cars could soon be scrapped or reduced in Norway’s larger cities as the country’s transport ministry is concerned public transport is losing out to low-emissions vehicles.

Minister of Transport Jon-Ivar Nygård told broadcaster NRK on Tuesday that discounts for electric cars could be withdrawn.

A law previously passed by parliament holds that electric cars should never incur more than 50 percent of the tax applied to petrol and diesel equivalents.

But reduced public transport revenues related to higher electric car use, as well as lower intakes from tolls around Oslo because the rate paid by electric cars is lower, are causing the government to rethink, NRK reports.

The loss in traffic revenues from tolls makes it harder to invest in infrastructure projects, while poorly performing public transport could result in cutbacks, the minister said according to NRK.

“We have seen a trend, especially during the pandemic, that car traffic has returned,” Nygård said to the broadcaster.

“It’s great that people use electric cars. But we are not well served by people get into their cars and drive into busy city areas instead of walking, bicycling or taking public transport,” he also said.

A final decision on the matter is yet to be taken, the minister said.

Norway’s owners’ association for electric cars, Elbilforeningen, said it opposed cutting discounts for green vehicles.

“(The government) is now considering throwing climate politics under the bus. We must remember that over 80 percent of cars in Norway still run on fossil fuels,” the organisation’s general secretary Christina Bu told NRK.

“We know that the toll (discounts) are one of the most important reasons for people choosing electric cars,” she said.

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Norway to remove VAT exemption for electric cars 

Electric cars over a certain value will be subject to VAT from next year, the Norwegian government announced in its revised national budget on Thursday. 

Norway to remove VAT exemption for electric cars 

The current VAT, or MVA, exemption for electric cars will be replaced with a subsidy scheme, the Norwegian government announced when unveiling its revised national budget. 

Under the new subsidy scheme, consumers will be required to pay VAT on all-electric cars that cost more than 500,000 kroner. The VAT charges will be introduced from January 1st 2023. 

“All-electric cars receive support at the bottom (of the price range), but the more expensive electric car you buy, the more VAT you have to pay,” Minister of Finance Trygve Slagsvold Vedum said of the announcement. 

READ MORE: What the revised national budget in Norway means for foreigners

Cars purchased between now and the end of the year will be exempt from VAT, regardless of price. 

Under the new subsidy scheme, buying an electric car with a sticker price of more than 600,000 kroner would become 25,000 kroner. 

Electric cars over 1 million kroner will become 12.5 percent more expensive due to the VAT charges. 

Norway’s Electric Car Association has said criticised the introduction of VAT. 

“The entire electric car policy is at stake. It’s an incomprehensibly bad idea,” Christina Bu, general secretary of the association, told public broadcaster NRK.

Generous tax incentives have contributed to more than half of new cars sold in Norway being electric vehicles