Norway, one of the world's earliest adopters of electric vehicles, is preparing to roll back key tax breaks that helped EVs go mainstream, according to Reuters. The change could drive up prices for buyers and slow global momentum for affordable, clean transportation.
What's happening?
Norway's government announced plans to phase out its main electric vehicle tax exemption by 2027, ending decades of incentives that made the Nordic nation a global leader in EV adoption.
Finance Minister Jens Stoltenberg said the move is coming because the country has already reached its goal of ending new gas and diesel car sales by 2025. "The time is ripe to phase out the benefits," he said, per Reuters.
Under the proposal, the tax-free threshold for new EVs will drop from around $49,500 to $29,700 in 2026 — meaning Tesla's Model Y, the country's best-selling car, will soon face a full 25% value-added tax.
By 2027, all EVs will then be fully taxed like traditional cars. That could add roughly $7,000 to the cost of a Model Y.
Why is Norway's change important?
For Tesla and other automakers, the new policy could dampen sales in one of the most EV-friendly markets in the world. Norway's success — where nearly every car sold in September was electric — has long been a model for countries aiming to reduce pollution and transition away from gas-powered vehicles.
Experts worry that the sudden change could make some drivers reconsider EV purchases. Christina Bu, head of the Norwegian EV Association, called the decision "hasty," adding that it risks pushing buyers back toward gas-powered models.
Tesla's challenges this year have also added to the pressure. The company has faced slowing sales in Europe and China alongside growing competition, with global deliveries falling for the first time since the COVID-19 pandemic.
What's being done about the proposed change?
The phaseout may mark the end of an era in Norway, but experts ultimately hope it won't stall global progress toward cleaner and more affordable transportation. The government said it will raise taxes on fossil fuel vehicles to maintain incentives for choosing electric options. It remains to be seen, however, whether that will offset the higher EV prices.
For drivers looking to make the switch, there are still plenty of reasons to go electric. EVs are cheaper to power and maintain, saving hundreds of dollars in fuel and repairs each year. They keep the air cleaner and reduce the harmful gases released into the atmosphere, making them the smart choice for your budget and the planet.
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