The electric vehicle transition and the impact of tax policy adjustments

: analyzing the effect of Norway’s 2023 value-added tax reform

Abstract

This thesis examines the effects of removing tax incentives on the demand for electric vehicles using the Norwegian value-added tax reform of 2023 as a natural experiment. A theoretical discrete choice model is developed that combines horizontal and vertical product differentiation to account for heterogeneity in products and consumer preferences with respect to the willingness to pay. The model predicts that the abolition of the VAT exemption for high-priced electric vehicles will lead to a decline in overall demand for electric vehicles, particularly among high-income households. To test this, a difference-in-differences design is applied to Norwegian microdata, comparing changes in electric vehicle registrations between high- and low-income households before and after the reform. The empirical results show a statistically significant negative effect on the probability of registering an electric vehicle in high-income households after the reform, while low-income households remain largely unaffected. These results support the central hypothesis that tax incentives influence the adoption of electric vehicles and underscore the importance of targeted fiscal policy for accelerating the transition to low-emission transportation.

Date of Award	14 Oct 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Magnus Knutsen (Supervisor)