Norway set to be the first to fully transition to electric vehicles

Norway is on track to become the world’s first nation to virtually eliminate gasoline and diesel vehicles from its new car market.

Despite having significant oil and gas reserves, Norway has earned a reputation as a leader in sustainable transportation. The sales of electric vehicles (EVs) surged from under 1% of total auto sales in 2010 to an impressive 88.9% last year, with no signs of slowing.

According to data from the Norwegian Public Roads Administration, EVs comprised over 96% of new car sales in the initial weeks of this year.

This positions Norway close to achieving a non-binding objective established by lawmakers in 2017 for a fully electric future.

Christina Bu, Secretary General of the Norwegian Electric Vehicle Association (NEVA), anticipates that Norway will meet this goal, even planning a celebration for what she believes will be a historic achievement.

“We have already invited many politicians and stakeholders to a celebration on February 13, as we anticipate ending the year with electric vehicle sales between 95% and 100%,” Bu shared with CNBC during a video call.

“In these times, especially with [Donald] Trump withdrawing the U.S. from the climate agreement, we need to celebrate our accomplishments,” she added.

In addition to withdrawing the U.S. from the Paris Agreement, Trump last week targeted various low-carbon technologies, including reversing Biden’s non-binding executive order aimed at achieving 50% electric vehicle sales by 2030.

This executive order, which faced criticism from EV advocates, sought to eliminate the EV mandate and emphasize consumer choice.

Cecilie Knibe Kroglund, Norway’s Deputy Transport Minister, highlighted that the nation’s long-term, consistent policies fostering EV adoption—rather than outright bans on internal combustion engines—were crucial for this transition.

In contrast, the European Union has implemented legislation to ban sales of new carbon-emitting vehicles starting in 2035, while the U.K. plans to stop selling new vehicles powered solely by internal combustion engines by 2030.

Norway’s incentives for electric vehicles include exemptions from VAT, road and parking tax reductions, and access to bus lanes. The government has made significant investments in public charging infrastructure, allowing many households to charge their EVs at home.

Kroglund referred to these changes as the “new normal” for Norway’s population of 5.5 million. “Transportation is a major aspect of climate-friendly solutions. We must ensure that the success we’ve achieved with cars translates into other transport sectors,” she stated during the video call.

Plans are in place for a complete transition to electric city buses by 2025, with a goal of making 75% of heavy-duty vehicles renewable by the end of the decade.

Even with new car sales nearing 100% electric, many internal combustion engine vehicles remain on Norwegian roads. According to NEVA’s Bu, fully electric cars account for 28% of all vehicles nationwide, rising to over 40% in Oslo.

Bu recounted, “Many middle-aged men have approached me, stating they would never consider an electric car, yet they later confess their enthusiasm for the model they now drive.”

“Our society has undergone a mental shift. It’s not that Norwegians are inherently greener; rather, effective policies have facilitated this change in mindset,” she explained.

Norway’s lack of a strong automaker lobby is believed to have contributed to its high EV adoption rate.

Bu noted how political discussions around transitioning from internal combustion engines exist, yet opponents haven’t been organized or influential enough to sway public opinion.

In stark contrast to Norway’s initiatives, electric vehicles accounted for only 8.1% of total U.S. sales in 2024, a slight increase from 7.8% in 2023, according to market research by Cox Automotive.

In the U.K., data indicates that EVs made up nearly 20% of new car registrations in 2024.

Rico Luman, a senior sector economist for transport and logistics at Dutch bank ING, remarked that Norway’s success underscores the potential for other nations to follow suit.

“Norway is a global leader in this regard and serves as a model for other countries. However, it’s important to recognize that Norway’s wealth allows it to maintain supportive budgets,” Luman told CNBC in an email.

“Additionally, energy costs are relatively low in Norway, making EVs more appealing. Other countries may struggle to achieve similar results, as seen by Germany’s abrupt halt of subsidies following a budget crisis,” he added.

Germany, the largest economy in Europe, abruptly eliminated EV subsidies in late 2023 amid budgetary constraints. The ruling coalition, which fell apart last year, has since proposed some tax relief for electric cars amid declining sales.

Professor Harald Nils Røstvik from the University of Stavanger stated he does not foresee Norway reversing its electric vehicle shift.

“The benefits of electric vehicles compared to noisy diesel cars are overwhelming. They’re quiet, economical, aesthetically pleasing, and for many, they’re a status symbol. Plus, they’re environmentally friendly, require less maintenance, and don’t involve oil changes,” Røstvik explained during a video call.

“Returning to noisy, dirty diesel cars is simply not a logical choice for the majority of people,” he concluded.