nature & planetOur World in Data
Norway has made almost all new cars electric, and it did so by using tax policy
Almost every new car sold in Norway is now electric, making it the world leader in electric vehicle sales by share. The main driver was tax policy: electric cars were exempted from high vehicle purchase taxes and VAT for many years, while petrol and diesel cars faced heavy taxes. Cheaper running costs, free or reduced tolls and parking, and access to bus lanes added further incentives. Norway also gets nearly all its electricity from hydropower, so the cars run on clean power.
Taxes on petrol and diesel cars were set much higher than on electric cars, so buying an electric car became cheaper in practice. Lower running costs and perks such as bus lane access made them more attractive to everyday drivers. As more people bought them, charging networks expanded and second-hand prices improved, which fed back into more sales.
Norway shows that deliberate policy, rather than technology alone, can rapidly change what people buy. Its experience is studied by countries trying to phase out petrol and diesel cars.
Governments have used similar tax exemptions and purchase grants to speed up adoption of new technologies, from hybrid cars to solar panels. Norway's experiment is one of the clearest cases of a carefully designed incentive changing a whole market.
