Sale and Registration of Electric Vehicles Slows Significantly

iceland green energy

A recent report from the Icelandic Automobile Association shows a significant decline in the sale and registration of new electric vehicles in Iceland.

Read more: Electric Motion

According to the numbers released, some 5,258 new passenger vehicles have been sold and registered so far this year. At the same time last year, 8,156 passenger vehicles had been sold and registered. This year’s numbers represent a 35% decrease from last year.

In addition to the decline in total passenger vehicles, EVs have also seen flagging numbers this year. The Icelandic Automobile Association reports that so far this year, 774 new EVs have been sold and registered, accounting for 14.7% of the market. This year’s numbers are some of the lowest-ever since the introduction of EVs to the Icelandic market.

In contrast, in the first five months of 2023, a total of 2,500 EVs were sold, which represented then a market share of 40.5%.

However, hybrid cars are performing well on the Icelandic market this year, with a total 1,288 new sales and registrations so far this year, representing 24% of the market. Hybrids are the best-performing category for passenger vehicles so far this year, followed by diesel vehicles in second place, and gasoline vehicles in third place.

Environmental targets

The Icelandic government has proposed a plan to replace fossil fuels with electricity in the coming decades, aiming for a total ban on new petrol and diesel vehicles by 2030 and to have 30,000 electric cars by 2026. The most recent available information from Statistics Iceland shows some 24,000 EVs in Iceland.

The City of Reykjavík has also set climate goals to achieve carbon neutrality by 2040, including reducing fossil fuel pumps. The city plans to increase the availability of charging stations and promote commuting by bicycle, foot, and public transport.


State to Subsidise Rental EVs with ISK 1 Billion

Minister Guðlaugur Þór Þórðarsson.

In further efforts to meet its commitments to reduce CO2 emissions, the state will support car rental companies this year with some ISK 1 billion [$7.2 million, €6.7 million] in subsidies to accelerate the electrification of their fleets.

Minister of Environment, Energy, and Climate Guðlaugur Þór Þórðarson stated recently that Iceland’s tourism industry must also play a role in the energy transition. This includes not just the electrification of the rental fleet, but also an expansion of charging stations at hotels and guesthouses throughout the nation.

Iceland to Buy Emission Allowances to Meet Kyoto Commitments

The matter was discussed at a cabinet meeting last Friday, March 17.

Minister Guðlaugur stated: “We will be supporting the car rentals to acquire electric cars. This is extremely important in order for us to achieve the energy transition,  as car rentals are naturally a large part of the national car fleet. And if we are going to reach our goals for electric vehicles, then car rentals have to be included. And it’s by including the car rentals, that we will be able to reach our goals much sooner.”

Read more: Public Transport Funding

According to the Minister, the higher average cost of electric vehicles has until now been a barrier to these companies from buying more of them. The subsidies will be structured like the subsidies already available to individuals, which remove VAT up to a certain limit on EVs.

In his statement on the EV subsidies, the Minister also highlighted the lack of charging stations across Iceland as a bottleneck.

“It is likewise very important that hotels and guesthouses cooperate, for this to be a viable option […] And in order for us to prevent ‘charging anxiety’ and for this to be as efficient as possible, people must be able to charge at night,” Guðlaugur said.