Norway Sets Pace in BEV Adoption

OSLO, Norway – Norway is on the verge of becoming the first country to end the sale of passenger vehicles with internal-combustion engines even as it scales back the tax incentives used to promote the sale of electric vehicles across the Nordic country of 5.5 million.

Sales of new vehicles with gasoline engines will end next year, though owners of used vehicles with gasoline or diesel engines can still sell or trade them. But any new vehicles sold in Norway in 2025 will be battery-powered as even the popularity of plug-in hybrid vehicles has steadily declined, according to the Norwegian Road Federation (OFV).

In September, EVs accounted for 96% of new-car sales, edging the country closer to a target of selling 100% battery-powered models as of next year. Of the 12,966 new passenger cars sold in September, 12,495 were electric, according to the OFV.

“Internal-combustion engines will soon be history,” says Christina Bu, secretary-general of the Norwegian EV Assn. “The Norwegian policy has been tremendously successful, reducing emissions from new passenger cars by over 90%. This success has not only influenced and paved the way for other countries but has also extended to various other forms of zero-emission transportation beyond just passenger cars.”

Lucid showroom in Oslo, Norway.

Since Norway is not a member of the European Union, it is sidestepping the contentious debate over tariffs on battery-electric vehicles made in China, which has prompted Chinese brands to enter the tiny Norwegian market. That in turn has put pressure on European and Japanese brands that seemed to dominate up until the past half-decade when BEV sales boomed in response to generous tax credits and an BEV-friendly power grid.

While oil from the North Sea has made Norway one of Europe’s wealthiest countries, the push for electric vehicles goes back to the 1990s when a law was approved doing away with all import duties on BEVs. Other benefits followed: free travel on toll roads, free fares on ferries, free parking in city car parks. Electric vehicles are 25% exempt from all VAT and environmental taxes. ICE vehicles pay a special fee to enter Oslo, the Norwegian capital, while BEVs are exempt.

As of 2012, electric or hybrid cars accounted for only 3% of new-vehicle sales. That share had soared to 79% by 2022, the Norwegian EV Assn. says.

Norway continues to promote BEVs by ensuring the installation of at least two charging stations every 31 miles (50 km) on all major roads as it uses the country’s oil revenue to rebuild infrastructure with new roads and tunnels through mountains. Norway also has added miles of bike paths and electric trains and buses to answer complaints it has not done enough to promote alternative forms of transportation.

The conventional wisdom in the U.S. suggests BEV sales have leveled off as traditional automakers such as Ford and Volkswagen grapple with the difficult transition from ICE vehicles to BEVs.

In Norway, with the transition to BEVs nearing completion, BEV and EV makers, including traditional stalwarts such as Ford, VW and Citroën, grapple with upstarts such as Tesla, Lucid and Polestar as well rising Chinese brands including BYD and Nio.

Lucid, Polestar and Nio have elaborate showrooms along Karl Johans gate, a walking street in a posh shopping area in the heart of the Norwegian capital a short distance from landmarks such as the Royal Palace, the Parliament building and Oslo City Hall where the ceremony honoring the Nobel Peace Prize recipient is held rather than in Stockholm, Sweden.

Tesla’s pre-eminence is starting to slip as newer models crowd into the Norwegian BEV market, according to Morten Salbu, who manages three Polestar stores in and around Oslo.

Polestar showroom in Oslo, Norway.

“There is real competition,” Salbu says, adding he is supposed to have six vehicles for test drives but has only two available now because of the demand.  Customers are drawn to Polestar by its Nordic roots since it is partially owned by Volvo in neighboring Sweden, with which Norway has a long shared history.

Lucid, on the other hand, emphasizes the brand's “All-American” roots, noting the vehicles are designed in California and made in America. “We do have a waiting list,” says Synne Fyrand, a studio advisor in the Lucid store on Karl Johans.

While BYD has set up shop in Oslo’s suburbs, Nio has built an elegant café to augment its showroom on Karl Johans. The café draws a steady stream of customers looking for coffee, as well as visitors checking out the vehicles on display.

Tesla topped Norway’s car sales for a third straight year in 2023, extending its lead over rivals despite an ongoing conflict between the U.S. BEV maker and the Nordic region’s powerful labor unions.

McKinsey & Co., in a recent study, notes Norway’s adoption of BEVs has been aided by the growth of charging infrastructure. The country now has 24,000 BEV charging spots, including in rural areas, and Tesla has installed 46 charging stations around Norway.

Chinese brand Nio's showroom includes cafe.

As automotive markets go, Norway is tiny.  New vehicle sales have averaged 180,000 units annually since 2020, a fraction of the new cars sold monthly in the U.S. or China.

About 2.8 million passenger vehicles are registered to the country’s 5.6 million residents.

The BBC, citing a report from the Norwegian Road Federation, estimates Norway is the first country to register more BEVs than ICE cars. The Federation reports 754,303 vehicles currently registered are all-electric, while 753,905 use gasoline and the remainder run on diesel.

In Bergen, Norway’s second-largest city, more than 40% of the cars on the road are EVs. Overall, BEVs account for more than 20% percent of Norway’s car parc.

Norway has certain advantages as it makes the transition to EVs. For one thing, it had no legacy automotive industry to protect so it was open to imports, and the country’s population is environmentally minded and keenly aware of climate change and the need to protect the environment even as Norway remains a major exporter of fossil fuels, such as oil and gas, to the rest of Europe.