New fee based on "per kilometre" usage issued earlier for electric carsÁrni Sæberg

Owners of electric, hydrogen and plug-in hybrid vehicles will have to pay a kilometre-rate in 2024. This is about a year earlier than owners of diesel and petrol vehicles, who will be charged the rate in early 2025.

In an announcement on the Government’s website, the council states that the kilometre-fee is part of a new system, and will replace the special fee for petrol and oil that is currently in effect.

Electric, hydro and plug-in-hybrid vehicles have so far borne a limited cost of using the road network and that the success of energy exchange requires financing of road transport to be independent of fossil fuel networks.

The estimates are that the cost of a kilometer will be ISK 6 for electric and hydrogen cars in the next year.

However, hybrid vechicles will pay a 2-kilometre-rate charge in the next year, one-third of the same as electric vehicles, as they use both electricity and fossil fuels and continue to pay the corresponding charges for using the latter.

Drive more kilometres per litre of fuel

“The significant advances in the development of more fuel-efficient cars have resulted in newer cars being able to drive considerably more kilometres per litre of fuel. This development has also weakened the ability of the Treasury to fund road maintenance and construction, since this revenue generation is based in large part on a fixed charge per litre of fuel,” the announcement reads.

It also states that by implementing the new system in two steps, the lessons learned from the implementation can be applied and the arrangements can be further strengthened in the future.

Electric- and hybrid vehicles have become almost fifth of all cars in circulation and Iceland has become the one of the leading nations in the energy transition. It is noted that this is especially thanks to government tax reduction on electric cars.

“Parallel with the success of the energy transition and the reduction of fuel consumption by the fleet of cars, the number of people and traffic has increased, with increasing pressure on the road network and the need for improvements in road infrastructure. It is therefore important that there is a system that can support financing the construction and maintenance of road infrastructure in line with usage.

The government has invested in extensive transport improvements in recent years in response to the increasing pressure. The draft of the parliamentary resolution on the transport strategy 2024-2038 calls for further developments with the aim of ensuring smooth and safe road transport throughout the country,” the report states.




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