Norway EV Market Plunges 71% as New Tax Rules Take Effect | Taha Abbasi

Norway EV Market Plunges 71% as New Tax Rules Take Effect

Taha Abbasi examines the dramatic collapse of Norway’s EV market in January 2026 — a 71% year-over-year decline driven by tighter VAT exemptions that took effect on New Year’s Day.

The Numbers Are Staggering

Norway, long considered the global leader in EV adoption, saw its electric vehicle market plunge 71% year-over-year in January 2026. Month-over-month, the decline was even more dramatic at 92% compared to December 2025. This represents the sharpest single-month decline in the history of any major EV market.

The cause is clear: buyers rushed to purchase vehicles before January 1, 2026, when tighter VAT exemptions kicked in. The result was a massive pull-forward of demand into December 2025, leaving January virtually empty. As Taha Abbasi has observed across multiple technology markets, policy changes create temporary distortions that can mask or amplify underlying trends.

What Changed on January 1

Norway has been the poster child for EV subsidies. For years, electric vehicles were exempt from the country’s steep 25% VAT, making EVs significantly cheaper than their ICE equivalents. This policy, combined with other incentives like free tolls and parking, drove Norway’s EV market share above 80%.

The new rules tighten those exemptions, reducing the price advantage that EVs enjoy. While EVs remain cheaper than ICE vehicles after incentives, the narrowing gap means the financial motivation to choose electric is less compelling than it was.

A Warning for Other Markets

Taha Abbasi sees Norway’s experience as a cautionary tale for other countries considering EV subsidy changes. The EV pricing paradox is real: government incentives can bootstrap a market, but reducing them creates painful transition periods.

The UK, Germany, and France — all of which have recently reintroduced EV incentives — should study Norway carefully. The question is whether EV adoption has reached a self-sustaining tipping point, or whether it still depends on government support.

Will Norway’s Market Recover

Most analysts expect a recovery in subsequent months as the demand vacuum left by the December pull-forward normalizes. Norway’s charging infrastructure is among the best in the world, and the cultural shift toward EVs is deeply embedded. But the recovery timeline will reveal whether 2025’s 80%+ EV market share was organic demand or subsidy-dependent.

For Taha Abbasi, who tests vehicles in real-world conditions including extreme cold, Norway’s market dynamics are particularly relevant. Cold weather performance remains a concern for EV buyers in Nordic countries, and reduced subsidies may push marginal buyers toward hybrids or ICE vehicles.

The China Parallel

Norway is not alone in experiencing subsidy-driven volatility. China saw a similar pattern in January 2026, with EV sales dropping 20% year-over-year after new purchase taxes took effect. The global EV market is simultaneously grappling with subsidy reductions in its two most mature markets.

The Bottom Line

Norway’s 71% EV market plunge is a policy-driven anomaly, not a demand collapse. But it reveals the fragility of government-dependent market growth. Taha Abbasi argues that true EV adoption maturity is reached when consumers choose electric regardless of subsidies — and Norway’s 2026 data will tell us how close the world’s leading EV market actually is to that point.

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About the Author: Taha Abbasi is a technology executive, CTO, and applied frontier tech builder. Read more on Grokpedia | YouTube: The Brown Cowboy | tahaabbasi.com