Norway’s new car tax by weight could have an adverse effect on sales of battery electric vehicles in a market where Tesla Inc TSLA is the leader.

What happened: Tesla’s electric vehicles dominate the Norwegian market, where four out of five new cars sold in 2022 were BEVs, Reuters reported.

Tesla was the market leader in racing for its second year, selling more cars than any other brand and capturing a 12.2% share of the overall market, according to the report.

While BEVs have so far been tax-exempt, the government in Norway levies taxes on vehicles with internal combustion engines.

See also: How to Buy Electric Vehicle (EV) Stocks.

Tesla CEO Elon Musk has praised Norway’s leadership in the electrification the country is striving for to completely stop the sale of gas-powered vehicles.

Earlier Sunday, Musk thanked the people of Norway for their “incredible support for electric vehicles.” He said: “Norway rocks!!”

Musk’s comments came in response to a Twitter post that said Tesla had run out of cars for Norway towards the end of 2022.

Why it matters: The new weight-based car tax could hurt sales of BEVs as they are heavier than their ICE equivalents.

“The electric car has become the new normal car for Norwegians and that means we need to look at how we use society’s funds,” an official at Norway’s transport ministry said in response to the tax, according to Reuters.

Norway has emerged as the country with the highest share of electric vehicles due to heavy subsidies that have reportedly cost Norway NOK 39.4 billion (US$4 billion) in lost revenue in 2022.

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