13 Oct 17

'Tesla tax' could kill Norway's EV-friendly image

Norway is the world leader in electric mobility. But a proposed 'Tesla tax' could put a serious dent in the country's EV-friendly image.

To see how far Norway is ahead of the rest of the world in terms of zero-emission mobility, just check the new vehicle sales figures for September: 60% were either full-electric or hybrid cars. So, Norway seems well on its way to hit its target of selling only zero-emission new vehicles by 2025. 

Extensive support
But that amazing EV sales figure is possible only because the Norwegian state offers extensive support in the form of subsidies, tax breaks, and reduced tolls and parking fees. For example, purchase subsidies for the most expensive Tesla can reduce its price by about 450,000 Norwegian krone (app. €48,000).

All that adds up to a lot of money forked out by the Norwegian state. Norway may be rich, but still: the new, centre-right government wants to lessen the impact of the country's costly EV policy by introducing a one-off tax of up to 82,800 Norwegian krone (app. €8,860) on all EVs weighing more than two tonnes.

Bad signal
The proposed measure has been dubbed a 'Tesla tax', because it would mainly affect the electric vehicles sold by that iconic, California-based manufacturer. Understandably, the proponents of electric mobility are dismayed by the proposal. “This is gambling with the whole EV market (in Norway). It is a bad signal to send and will affect consumers”, Christina Bu, general secretary of the Norsk Elbilforening (Norwegian EV Association) told the Financial Times. 

But the government proposal has some support among the Norwegian public, with many resenting the preferential treatment given to EVs. Bus drivers in Oslo for example complain that EVs are causing traffic problems on the bus lanes that they too are allowed to use. Politicians in the Norwegian capital have pointed out that EVs are contributing disproportionately to road deterioration due to their higher weight.

Still fragile
With that context in mind, a fiscal backlash against EVs is somewhat understandable. But  that doesn't mean it wouldn't hurt. Despite robust sales figures, the Norwegian EV market is still fragile, the Norsk Elbilforening says. For evidence, the organisation points to the collapse in Danish EV sales following the withdrawal of certain fiscal advantages in that country. 

And in any case, the proposal breaks a pledge by the (previous) Norwegian government not to change the mix of tax breaks, subsidies and other EV-friendly measures until 2020. 

The proposal, which is certain to face heavy opposition in the Norwegian parliament, points to a larger question, which will have to be faced by other countries sooner or later: as EVs become more mainstream, exactly when and how will governments shift the burden of vehicle taxation from fossil-fuel cars to electric vehicles? Here too, Norway may lead the way to the future...

Image: Norsk Elbilforening, CC BY 2.0

Authored by: Frank Jacobs