Norway, which has emerged as the world's leading market for zero-emission electric vehicles despite also leaning heavily on revenue from oil extraction, may be on the verge of enacting steep cutbacks to some of the tax breaks for Teslas and other EVs.
The proposed 2018 budget, released by Norway's center-right government, would mainly target electrified cars weighing more than 2 tons, a designation that would affect Tesla's Model S sedan and Model X luxury SUV. The so-called "Tesla Tax" proposal could increase the price of a Model X by as much as $8,850. According to The Local, "Non-chargeable hybrid cars will lose their weight subsidies, becoming subjected to charges based on emissions and weight — making their taxation equivalent to traditionally-fueled vehicles, writes NRK."
Norway has a goal of selling only zero-emission vehicles by 2025. Sales of EVs and hybrids comprised 60 percent of new vehicle sales last month, according to the Financial Times, thanks to generous subsidies in taxes, tolls and parking fees. Despite its small population (only about 5.1 million), Norway leads the world in the number of electric cars per capita, at 215.6 per 10,000 residents, about 12 times as many as in the U.S. About 35 percent of new cars sold in the country feature some form of electrification.
But supporters of the tax argue that the popularity of EVs has led to traffic congestion in Oslo, the capital, and clogged bus lanes, where they are allowed. They also note that EVs contribute just as much to road wear and tear as conventional vehicles.
Norway's tax breaks on EVs, which exempt them from the 25 percent VAT and purchase taxes, were supposed to remain until at least 2020. The new proposal is expected to face plenty of opposition in parliament, and members will no doubt point to Denmark, where EV sales fell 60 percent after that government opted to phase out tax incentives.
Norway last toyed with the idea of doing away with some EV incentives in 2015.