Norway zips ahead in EV race as car sales hit 96 percent electric

Almost all new cars registered in Norway last year were fully electric, official data showed on Friday, headed by booming Tesla sales as the Nordic country cements its global lead in phasing out petrol and diesel-powered vehicles.

Oil-producing Norway's rapid switch to battery-powered vehicles contrasts with the rest of Europe, where weak demand for EVs prompted the European Union last month to reverse its planned 2035 ban on internal combustion engine cars.

Driven by tax incentives, 95.9 percent of all new cars registered in Norway in 2025 were EVs, with that number at almost 98 percent in December. The annual figure was up from 88.9 percent in 2024, Norwegian Road Federation (OFV) data showed.

A record 179,549 new cars were registered in Norway during the year, a 40 percent increase from 2024, the OFV said.

EV TAXES SET TO RISE

Tesla was Norway's top-selling car brand for a fifth consecutive year, with a 19.1 percent market share, followed by Volkswagen at 13.3 percent of registrations and Volvo Cars at 7.8 percent.

Led by the mass-market crossover Model Y, Tesla sold 27,621 cars in Norway in 2025, more than any other automaker has sold in the country in a single year, overcoming a consumer backlash plaguing the brand in much of Europe over CEO Elon Musk's support for far-right parties and his backing of US President Donald Trump.

Cars produced in China had a 13.7 percent market share in Norway in 2025, up from 10.4 percent the previous year, led by automaker BYD which more than doubled the number of cars it sold in the Nordic country.

Norway, which began taxing EVs in 2023, announced in October that it would add up to $5,000 in value-added tax per vehicle from Jan 1, 2026, sparking a rush among buyers and car firms to beat the 2025 year-end deadline.

"What we did very quickly was to redirect a number of cars that were not originally intended for Norway, to get them here faster," Ford Norway's F.N Managing Director Per Gunnar Berg told Reuters.

CARROT AND STICK PROPELS NORWAY'S EV SHIFT

While some EV incentives have been pulled back, the government has also consistently added charges to petrol and diesel cars to make them more expensive, said Christina Bu, head of the Norwegian EV association.

"That is often misunderstood outside of Norway - they all think it's about tax exemptions and incentives, but it's very much also about the whip," Bu said. "ICE (internal combustion engine) cars are taxed out of business in a way."

The few fossil-fuel cars registered in 2025 were mostly specialised vehicles such as wheelchair-accessible vehicles or those used by police and other first responders, alongside a few hybrid models and sports cars.

EVs costing less than 300,000 Norwegian crowns ($29,831.75) remain exempt from VAT in 2026, in a potential boost for small cars, executives said.

"I think the tax changes will accelerate the return of compact cars... which used to dominate both Norway and Europe," Ford's Berg said.

Ulf Tore Hekneby, head of Harald A Moller which imports Volkswagen, Audi, Skoda and CUPRA vehicles, said more combustion engine models would launch as electric and that his company had managed to get more cars late last year by arranging with the factories to accelerate output and prioritise Norway in production allocation.

"There will be a great deal of new launches from our brands for compact cars so we'll get a new lineup that we haven't had in many years," Hekneby said.