Norway has moved to the brink of eliminating petrol and diesel cars from its new vehicle market, after electric vehicles accounted for an unprecedented 95.9% of all new passenger car registrations in 2025, cementing the country’s status as the global frontrunner in the shift to clean transportation.

Data published on Friday by the Norwegian Road Traffic Information Council (OFV) showed that nearly all new cars sold last year were fully electric, up sharply from 88.9% in 2024. The transition accelerated dramatically toward the end of the year, with electric vehicles making up 98% of all new registrations in December alone.

The surge came in a year of record-breaking overall car sales. Norway registered 179,549 new passenger cars in 2025, a 40% increase from the previous year and the highest annual total ever recorded, surpassing the earlier peak set in 2021. The figures underline how the electrification push has coincided not with a contraction in car ownership, but with a strong rebound in demand.

“2025 has been a very special car year. We see the effect of long-term and targeted electric car policy, and how specific tax decisions have immediate effects on the market,” OFV director Geir Inge Stokke said.

He pointed to a late-year rush by buyers seeking to take advantage of favorable incentives before a value-added tax change takes effect from January 1, 2026, which is expected to raise the cost of some electric models.

“The final sprint towards the end of the year has been historically strong, and there is no doubt that the VAT change from January 1, 2026 has contributed to a great many choosing to secure a new electric car before the year was over,” Stokke added.

Norway’s approach stands out globally because it has relied on sustained incentives rather than outright bans on internal combustion engine vehicles. Successive governments have offered generous tax exemptions, reduced tolls, free or discounted parking, and access to bus lanes for EV drivers, while steadily increasing taxes on petrol and diesel cars. The result has been a market-driven transition that has reshaped consumer behavior over more than a decade.

Norway’s Deputy Transport Minister Cecilie Knibe Kroglund said last year that the country’s success was rooted in policy consistency rather than abrupt restrictions. She stressed that predictable, long-term measures supporting electric vehicles gave both consumers and automakers the confidence to invest in the shift away from fossil-fuel cars.

The implications stretch beyond Norway’s borders. As an oil- and gas-producing nation with one of the world’s highest EV adoption rates, Norway has become a real-world test case for other countries weighing how quickly they can decarbonize road transport without undermining mobility or economic activity. Policymakers and automakers across Europe and beyond routinely study the Norwegian market to gauge how incentives, pricing, and infrastructure interact at scale.

Tesla remained the single biggest winner in Norway’s electric boom. The U.S. automaker was the country’s top-selling car brand for a fifth straight year, accounting for nearly one in five new cars sold. A total of 34,285 new Tesla passenger vehicles were registered in 2025, a 41% increase from 24,259 in 2024, according to OFV data.

The Model Y dominated Tesla’s performance, with 27,621 new registrations nationwide, making it by far the most popular individual model on Norwegian roads. Stokke said Tesla’s performance was notable not just for its market share, but for the scale it achieved with a relatively narrow lineup.

“Taking almost 20 percent market share in a year with record-high new car sales is in itself remarkable,” he said. “When a brand also achieves such volumes with so few models, it says a lot about both demand and Tesla’s impact in the Norwegian market.”

Norway offered Tesla a rare bright spot in Europe during 2025, as the company faced slowing demand and intensifying competition in several other major markets. That contrast was underscored by Tesla’s broader delivery figures released on Friday, showing global fourth-quarter deliveries of 418,227 vehicles, down 16% from the same period in 2024.

While battery electric vehicles now overwhelmingly dominate Norway’s new car sales, the transition is not entirely complete. A small share of registrations still includes plug-in hybrids and a dwindling number of combustion-engine vehicles, typically linked to specialized needs or niche buyers. However, with EVs already close to total market saturation, analysts say it is increasingly a matter of when, not if, petrol and diesel cars effectively disappear from Norway’s new car showrooms.

Attention is now shifting to how policy changes, including adjustments to taxes and incentives, will shape demand in a market that is already almost fully electric. Even so, Norway’s 2025 figures mark a milestone that few other countries have yet approached, offering a glimpse of what a post-combustion car market can look like on a national scale.

Germany’s manufacturing sector slipped deeper into contraction in December, closing out 2025 on a fragile note that underlines how vulnerable Europe’s largest industrial economy remains to weak global demand, high costs, and prolonged uncertainty in key export markets.

The HCOB final Purchasing Managers’ Index (PMI) for German manufacturing, compiled by S&P Global, fell to 47.0 in December from 48.2 in November. The final reading was weaker than the preliminary estimate of 47.7, signaling a sharper deterioration in conditions than first indicated. Any reading below 50 points to contraction, while levels above that threshold indicate expansion.

December marked the first decline in factory output in 10 months, ending a tentative recovery that had raised cautious hopes earlier in 2025 that the sector was stabilizing after a prolonged slump. Instead, the latest data suggest that improvement was short-lived.

The primary drag came from exports, a critical engine of German manufacturing. Export orders fell for a fifth consecutive month, with the pace of decline accelerating to its fastest rate since December 2024. That trend reflects weakening demand from major overseas markets, including China, where industrial activity has struggled, and parts of Europe, where high interest rates and subdued consumer spending have constrained growth.

“Manufacturing had shown hints of recovery earlier in 2025, but the downturn has deepened again in December, driven by investment and consumer goods,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank AG.

His assessment points to a slowdown that is no longer confined to a single niche but cuts across core segments of Germany’s industrial base.

The survey revealed broad-based strain on factory operations. Employment fell at the steepest pace in six months, as manufacturers trimmed workforces to align capacity with weaker order books. Cuts to purchasing activity and inventories also deepened, signaling caution among firms about stocking up amid uncertainty over future demand.

For Germany, where manufacturing jobs carry outsized economic and political significance, sustained workforce reductions are a sensitive issue. The sector has already been grappling with structural shifts, including the transition away from combustion engines, rising competition from Chinese manufacturers, and the need to invest heavily in digitalization and decarbonization.

Cost pressures, while less acute than during the peak of the energy crisis, remain a persistent challenge. Energy prices have eased from extreme levels, but they are still higher than pre-crisis norms, particularly for energy-intensive industries such as chemicals, metals, and glass. At the same time, elevated borrowing costs through much of 2025 dampened investment, both at home and among key trading partners.

The December PMI also highlights how Germany’s manufacturing struggles fit into a broader European pattern. Factory activity across the euro zone has remained under pressure, but Germany’s heavy reliance on exports and capital goods makes it especially exposed when global trade slows. Weakness in German factories often ripples through supply chains across Central and Eastern Europe, amplifying the regional impact.

Despite the grim near-term picture, the survey showed a modest improvement in confidence about the future. Manufacturers’ expectations for output over the next 12 months rose to a six-month high. Firms cited hopes that new product launches, alongside increased public spending on defense and infrastructure, could help lift demand in 2026.

“With the start of government-backed infrastructure projects and the booming demand for defense equipment, things could look different in 2026,” de la Rubia said.

Germany has pledged higher defense spending amid shifting security priorities, and policymakers have also signaled support for infrastructure investment to modernize transport, energy, and digital networks.

Those expectations, however, hinge on policy follow-through and an improvement in external demand. Economists note that without a clearer rebound in exports or a stronger pickup in private investment, any recovery could prove uneven. The outlook is further complicated by geopolitical risks, trade tensions, and uncertainty over how quickly global interest rates will fall.

The December PMI figures leave Germany’s manufacturing sector entering 2026 in a weakened state, having failed to build sustained momentum in the past year. While optimism about future production suggests firms are not giving up on a turnaround, the data underline how dependent that recovery may be on fiscal support, improved global conditions, and the ability of manufacturers to adapt to structural change.

The global electric vehicle race has reached an inflection point, and the balance of power is no longer where it once stood. After years of setting the pace, Tesla has been overtaken — not by a Western rival, but by a Chinese manufacturer that was once openly dismissed by Elon Musk.

BYD has now emerged as the world’s largest seller of battery electric vehicles, overtaking Tesla in 2025 and underscoring how decisively China’s EV industry has matured. The shift reflects more than a single year of sales figures. It marks a structural change in the global EV market, driven by cost advantages, rapid technological iteration, and aggressive international expansion by Chinese manufacturers.

BYD said it sold 2.25 million battery-powered electric vehicles in 2025, a nearly 28% increase from the previous year. Tesla, meanwhile, reported sales of 1.64 million vehicles, an 8.5% decline that puts the company on track for its weakest annual performance since it became the dominant force in electric mobility. The reversal ends Tesla’s seven-year run as the world’s largest seller of battery EVs, a title it had held since 2018.

The headline figures only tell part of the story. When plug-in hybrids are included, BYD had already surpassed Tesla in overall electrified vehicle sales in 2024. In total, BYD delivered about 4.6 million vehicles last year, reflecting a scale Tesla cannot currently match, largely because it does not sell hybrids. That strategic choice has become increasingly costly as consumers in many markets gravitate toward cheaper, more flexible electrified options amid high interest rates and uneven charging infrastructure.

Tesla’s slide comes after a bruising year on multiple fronts. In the United States, the removal of the $7,500 federal tax credit for new electric vehicles in September triggered a sharp slowdown in demand across the industry, hitting Tesla particularly hard. Fourth-quarter sales fell nearly 16% year-on-year, as higher prices and tighter financing conditions pushed many buyers to delay purchases.

Europe has proven even more challenging. Tesla’s sales there have slumped amid intensifying competition and growing consumer backlash linked to Musk’s political statements, which have increasingly spilled into the public perception of the brand. In China, Tesla faces perhaps its toughest test yet: a domestic market saturated with technologically advanced, aggressively priced electric vehicles produced by local rivals.

At the center of that competitive pressure is BYD. Once best known as a battery supplier and later backed by Warren Buffett, BYD has transformed into one of China’s most formidable automakers. Its strength lies in breadth and integration. The company designs and manufactures batteries, power electronics, and vehicles largely in-house, giving it cost control and supply-chain resilience that many rivals lack.

BYD’s product range spans from premium models and performance vehicles priced around $200,000 to ultra-affordable mass-market cars like the Seagull hatchback, which sells for roughly $7,800. That pricing flexibility has allowed BYD to dominate China’s EV market and gain traction overseas, particularly in price-sensitive regions.

Technology has also been central to BYD’s rise. Over the past year, the company has unveiled ultra-fast charging systems capable of delivering a meaningful range in about five minutes, narrowing one of Tesla’s long-held advantages. It has also rolled out advanced driver-assistance and autonomous features at no additional cost, a move that resonates with consumers increasingly wary of expensive software add-ons.

The contrast with Tesla has become sharper. Tesla’s valuation still reflects expectations of dominance in autonomy, software, and AI-driven mobility, yet its core vehicle business is under pressure from falling volumes, rising competition, and limited near-term product refreshes. The company’s reliance on a narrower lineup, led by the Model Y, has left it exposed as rivals flood the market with new designs and features.

Ironically, Musk himself has acknowledged how far BYD has come. A resurfaced video from more than a decade ago shows him laughing off the idea that BYD’s cars could compete with Tesla’s. When the clip went viral again in 2023, Musk responded more soberly, saying, “That was many years ago. Their cars are highly competitive these days.”

But BYD’s ascent has not been entirely smooth. The company has faced intense competition from domestic rivals such as Geely and regulatory pressure from Chinese authorities seeking to curb aggressive price discounting. Its sales fell 10% year-on-year in December, and its share price has dropped about 20% over the past six months, reflecting investor concerns about margins and slowing growth at home.

Yet BYD is increasingly leaning on international markets to sustain momentum. Overseas sales surged in 2025, and the company plans to open as many as 1,000 new retail outlets across Europe. That strategy is already delivering symbolic wins. BYD outsold Tesla in Europe for the first time last May, signaling that its appeal is extending well beyond China.

The broader implication is clear. The global EV market is no longer shaped primarily by Silicon Valley innovation or Western policy incentives. It is being redefined by Chinese manufacturers that combine scale, speed, and affordability, backed by deep domestic supply chains and relentless competition.