Norway’s electric car owners face ‘Tesla tax’

A Tesla Model X, which could cost up to $10,500 more in Norway if the tax is imposed © Bloomberg

Norway is proposing a "Tesla tax" that would hit owners of the heaviest electric cars in a move that critics say will undermine the Scandinavian country's standing as a pioneer of zero-emission vehicles.

Sales of electric cars and hybrids accounted for 60 per cent of new vehicle sales in Norway last month, fuelled by extensive subsidies in taxes, tolls and parking fees.

But the centre-right minority government in Oslo is now proposing a one-off tax on all electric cars that weigh more than two tonnes — something that at present would predominantly target Teslas and potentially add up to NKr82,800 ($10,500) to the cost of buying one.

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Tuesday, 19 September, 2017

"This is a tax bomb. This is gambling with the whole electric vehicle market. It is a bad signal to send and will affect consumers," Christina Bu, general secretary of the Norwegian Electric Vehicle Association, told the Financial Times.

Norway has been hugely successful in introducing electric cars and aims to sell only zero-emission new vehicles by 2025. But critics argue that their popularity is mostly down to an extremely generous set of subsidies that can cut the price of the most expensive Teslas by about NKr450,000.

When and how to withdraw those subsidies has sparked a huge political debate. Some Norwegian politicians point out that many of the early adopters of electric cars were rich households buying Teslas. Bus drivers in the richest parts of Oslo complain that bus lanes are clogged with electric cars, which are permitted to use them.

Before the tax proposal on Thursday, Andreas Halse, environmental spokesman in Oslo for the opposition Labour party, said although electric cars generated no emissions they contributed significantly to congestion in the capital as well as damaging roads because of their weight. "It is not just about emissions; there are other considerations, too, such as the use of cars versus public transport," he added.

The new tax proposals would add at least NKr36,000 and as much as NKr82,800 to the cost of the Tesla Model X, a sport utility vehicle popular in Norway because of its ability to tow trailers, a feature appreciated by families who own mountain cabins.

Ms Bu said that despite the success of electric vehicles, the market was still fragile, pointing to a significant fall in sales in neighbouring Denmark when some tax advantages were withdrawn. "It's too early. Nobody is saying we are never going to tax electric vehicles. But the government had promised to keep the regime the same until 2020," she added.

The proposal is likely to face fierce resistance in parliament with some of the minority government's traditional allies already voicing criticism.

The electric car tax was part of the 2018 budget proposals in which the government outlined plans to use a record sum from its sovereign wealth fund, earmarking NKr231bn ($29bn) from its oil fund, about 2.9 per cent of assets.

Source: Norway's electric car owners face 'Tesla tax'