Norway is set to become the first country to fully transition to electric vehicles

Oslo Taxi’s Tesla model Y (L) and the NIO ET5 electric vehicle from Nio Inc, a Chinese multinational electric car manufacturer, drive through the Norwegian capital Oslo, on September 27, 2024.

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Norway is set to become the first country in the world to effectively erase gasoline and diesel cars from its new car market.

Despite its vast oil and gas reserves, the Nordic country has long been recognized as a global leader in sustainable transportation. Its electric vehicle (EV) sales have increased from less than 1% of total auto sales in 2010 to a whopping 88.9% last year — and this trend doesn’t show any sign of slowing.

Data published by the Norwegian Public Roads Administration, which is responsible for the country’s national road network, found EVs accounted for more than 96% of new cars sold in the first few weeks of this year.

It puts Norway within touching distance of going fully electric — realizing a non-binding goal that was first established by lawmakers back in 2017.

Christina Bu, secretary general of the Norwegian EV Association (NEVA), which represents electric car owners in the country, expects Norway to hit this target. In fact, Bu said plans were underway to hold a party to celebrate what she said would be a historic milestone.

“We have already invited a lot of politicians and different stakeholders to a party on the 13th of February because, we don’t know exactly until the year has ended, but everyone says we will end somewhere between 95% and 100% this year,” Bu told CNBC via video call.

“So, in times like this with [President Donald] Trump withdrawing the U.S. from the climate agreement and everything, I think we need to celebrate the achievements that we have managed,” she added.

An electric vehicle of German car manufacturer Audi is charged via a charging station outside the Norwegian capital Oslo on September 25, 2024.

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Alongside a push to withdraw the U.S. from the landmark Paris Agreement, Trump also took aim at several low-carbon technologies last week. This included revoking predecessor Joe Biden’s non-binding executive order which targeted 50% electric vehicle sales by 2030.

Trump’s executive order, which was criticized by EV advocates, was designed to “eliminate the electric vehicle (EV) mandate and promote true consumer choice.”

Norway’s Deputy Transport Minister Cecilie Knibe Kroglund said long-term and consistent policies designed to support the uptake of EVs — rather than imposing measures to ban the use of internal combustion engine vehicles — had been pivotal to the country’s transition.

Comparatively, the European Union adopted legislation to effectively ban sales of new carbon-emitting cars from 2035, while the U.K. has said it will ban the sale of new cars powered solely by internal combustion engines by 2030.

Some of Norway’s EV incentives include a VAT exemption, discounts on road and parking taxes and access to bus lanes. The government has also heavily invested in public charging infrastructure, and many Norwegian households are able to charge their cars at home.

Kroglund described the changes as a “new normal” for the country of 5.5 million. “Transport is a big part of the answer for climate-friendly solutions. So, we need to make sure that some of the success we have had with cars can be used for other areas of the transport sector,” Kroglund told CNBC via video call.

Kroglund said the country planned to fully transition to electric city buses in 2025, while making heavy-duty vehicles 75% renewable by the end of the decade. 

Vehicles have work done in the garage of the Bertel O. Steen (BOS.no) dealership in Lorenskog, Norway, on Wednesday, Nov. 6, 2024.

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While new car sales in Norway are close to 100% electric, there are still plenty of vehicles with internal combustion engines on the road. NEVA’s Bu said 28% of cars are fully electric at the national level, although this rises to over 40% in the capital Oslo.

“So many middle-aged men have come up to me to say: ‘I was never going to get an electric car — not at all,’ and next they say: ‘But now I drive a …’ and they tell me the model they drive and get all enthusiastic about the technology and everything,” Bu said.

“Our whole society has gone through this mental shift. I mean, it’s not like Norwegians are greener or more prone do this kind of thing than others. It was the policies that did it and people quickly understood and changed their thinking about this,” she added.

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The lack of an automaker lobby in Norway is thought to have benefitted the country’s EV adoption rate over the years.

Indeed, Bu said while there have frequently been political debates about the merits of transitioning away from internal combustion engines, those opposing the switch “haven’t been strong enough or organized enough.”

By contrast to Norway’s push to go fully electric, EVs accounted for 8.1% of total U.S. sales in 2024. That figure was up from a 7.8% share of the market in 2023, according to market research firm Cox Automotive.

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

Rico Luman, senior sector economist for transport and logistics at Dutch bank ING, said Norway’s EV leadership shows that it is possible for other countries to follow suit.

“Norway is a global front-runner, and in this respect also an example for other countries. Though, we also have to keep in mind that Norway is one of the most prosperous countries in Europe, which can easily afford relentless budgets,” Luman told CNBC via email.

“Another point is that energy is relatively cheap in Norway (as large oil and gas exporter), which makes EVs more attractive. Most others can’t meet that level — and think of what happened in Germany after the sudden phase out for subsidies for the general public following budget constraints,” Luman said.

Resident Baard Gundersen steps into his BMW iX all-electric vehicle in Baerum, a suburb of the Norwegian capital Oslo, on September 27, 2024.

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Germany, Europe’s largest economy, abruptly removed EV subsidies in late 2023 in the wake of an agreement to overcome a budget crisis. The country’s ruling coalition government, which collapsed late last year, has since agreed on a proposal to provide some tax relief for electric cars amid falling sales.

Harald Nils Røstvik, a professor at Norway’s University of Stavanger, said he does not expect Norway to backslide on its EV transition.

“The advantages of an electric car versus a noisy diesel car are so many. It’s quiet, it’s more economical, they look good, it’s a kind of status symbol for many, it’s clean, you don’t need to shift your oil filter, you don’t have to open the bonnet,” Røstvik told CNBC via video call.

“We will not return to the bulky, noisy, dirty diesel car. I mean, for the majority. It is just not logical,” Røstvik said.