Nearly a third of all new cars sold in the country this year will be plug-in models and experts expect that share to skyrocket

While tourists explore Oslo’s history in the grounds of the centuries-old Akershus fortress, below their feet is a harbinger of the city’s future.

Here in the catacombs sit scores of Teslas, Nissan Leafs and BMW i3s, plugged into the charging points of the world’s largest public garage for electric cars.

Walter Mulling is on his first visit to the garage, and is excited about the prospect of parking and charging his electric VW Golf for free. “We are in the future,” he says.

Norway is the undisputed world leader on electric cars, run almost exclusively off the nation’s copious hydropower resource. Nearly a third of all new cars sold in the country this year will be a plug-in model – either fully electric or a hybrid – and experts expect that share to rise to as much as 40% next year.

The capital is a glimpse of what’s in store for the UK, where electric vehicles are nearing just 2% of new car sales but registrations are growing at a fast pace, up 38% this year so far. In Oslo, the streets are filled with silent, gliding cars, from large ones such as the Tesla X to smaller models such as the Renault Zoe. For the drivers of these cars, the motivation is simple – they just make financial sense.

Norway’s lead on electric cars has been driven by the government backing them with a wide range of generous incentives and perks, as a way of meeting its climate change ambitions. Buyers do not pay import tax and VAT on plug-in cars, shaving thousands of pounds off the upfront cost. Running costs are lower because electricity is cheaper than petrol and diesel, while road tax is reduced – and will drop to zero next year.

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Electric car owners do not pay the mosaic of road tolls, ferry fees and city emissions charges that other Norwegians face. Moreover, they can park for free and bypass traffic by driving in some bus lanes.

“For my type of driving this is perfect,” says Vibeke Krohn, a pension fund executive. She uses a Mercedes B250e, which replaced an old diesel, to drop her children to school, commute to work and run errands.

“We have one [petrol] car we drive to the mountains and a small electric for the city,” says Krohn, who charges at home and says her only complaint is there are not more public charging points.

Despite the successful take-up of electric car in Norway, there is no guarantee that the lavish political support for battery powered transport will continue. The government made headlines in October with its proposal to end tax exemptions for the heaviest electric cars in 2018, quickly labelled a “Tesla tax” because it would initially affect only two Tesla models.

For Jørgen Næsje, a minister at Norway’s finance department, the rationale was simple. “[Those] people who have the money to buy those very expensive and heavy cars could afford to buy [pay] some import tax,” he told the Guardian, adding his party did not see cars as a “cash cow”.

But electric car advocates argued the change was too early, and the minority government’s partners forced it to drop the measure during negotiations on the tax package. Christina Blu, the secretary general of the Norwegian Electric Vehicle Association, said the change would have deterred uptake of new large family models that are needed and coming on to the market next year, such as the Jaguar I-PACE.

“Norwegians like to buy big cars because they want to go in the mountains and things like that. If you want to go to 100% share, you have to help electric cars in the large segment,” she says, referring to Norway’s goal of 100% of new cars having zero emissions by 2025.

Viktor Irle, a market analyst at EV-Volumes, which tracks electric car sales globally, says demand in Norway is currently so great that there are months-long waiting lists for new models such as the I-PACE and Hyundai Ioniq.

Ending the exemption for heavier cars would make sense in coming years – but doing so now would shake the market, he says, adding: “I think it’s important to show stability from the political side.”

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Ola Elvestuen, the deputy leader of the Liberal party, is pleased the Tesla tax proposal was defeated, but conceded government support will have to tail off eventually. “Over time, gradually, electric owners have to start to pay. But it has to be done in such a way that you don’t stop the transition,” he says.

Elvestuen is also relaxed at the prospect of fuel tax declining as electric cars come to dominate, arguing that overall the effect will be revenue neutral as taxation is shifted to other parts of the economy.

“Of course the government needs its revenue. But this is part of what we call a green tax shift. You have to tax what you want less of, and promote what you want more of,” he says.

Norwegian politicians reject the charge that only an affluent country such as Norway, made rich through oil and gas, could afford such support for electric vehicles. Per Espen Stoknes, an MP for the Green Party and an electric car owner, said: “I think that’s a misperception. I’m glad we’re doing it because it helps [bring] down the prices of electric vehicles, so it’s cheaper for other nations to follow us later. It’s part of a green taxation shift. Norway can do it because you’re rich? It doesn’t add up. It’s about what you tax.”

But in Oslo, not everyone wants a car, regardless of whether it is electric or not. Stoknes sees a shift coming, where electric motors and driverless technology combine to make the current car ownership model redundant.

“It’s very individualist, 20th century,” he said, of the idea of everyone having one or more cars of their own. “The next generation are completely cool with sharing.”