UPDATE 1-Despite Q3 decline, Tesla's Model 3 stays on top in Norway

* Norway leads world in per-capita electric auto sales

* Tesla's Model 3 is Norway's top-selling car in 2019

* Q3 sales of Model 3 below Q1, Q2 levels

* Norway seeks to end combustion engine sales by 2025 (adds market share data, bullets, background)

OSLO, Oct 1 (Reuters) - Tesla Inc's electric Model 3 remained Norway's top-selling car in the third quarter, although its sales declined from earlier in the year, registration data showed on Tuesday.

Tesla sold 3,300 Model 3s in Norway in July-September, beating Volkswagen's Golf by some 900 cars. But the Model 3 total was down from 6,123 in the first quarter and 4,438 in the second, according to the Norwegian Road Federation.

Seeking to end the sale of diesel and petrol engines by the middle of next decade, Norway exempts battery-powered cars from taxes imposed on fossil fuel vehicles.

Introduced to most European markets in early 2019, Tesla's mid-sized Model 3 sedan quickly became a bestseller in the Nordic nation, helping the country retain its top global ranking in per-capita electric vehicle sales.

Tesla is counting on the Model 3, which is cheaper than its larger Model S and Model X, to transform it from a loss-prone niche player to a profitable heavyweight in the auto industry.

Last week, an internal email said the U.S. company had "a shot" at delivering 100,000 cars globally in the July-September quarter, industry journal Electrek reported.

Sales of the S and X models, meanwhile, have declined in Norway this year, as some buyers have opted for the cheaper Model 3, while others have chosen recently introduced all-electric SUVs from Audi and Jaguar Land Rover .

In September, 54.5% of all new cars sold in Norway were fully electric, up from 45.3% in the same month last year and beating the 31.2% of registrations for the whole of 2018.

The International Energy Agency (IEA), which includes more widely-sold plug-in hybrids when counting electric cars, measured Norway's share at 46% of sales in 2018, while most major nations were still in the low-to-mid single digits. (Reporting by Terje Solsvik; Editing by Nerijus Adomaitis and Mark Potter)