Tesla electric cars, branded by a Labour Party politician on Wednesday as “fun toys” for affluent men, may suddenly become much more expensive in Norway if the party prevails in cutting their tax advantages. Others also appear ready to step on the brakes regarding current electric car incentives, which have allowed Tesla owners to avoid an estimated NOK 2.3 billion in taxes over the past few years.
Critics claim Tesla owners have enjoyed a bit of a free ride in recent years. Newspaper Dagens Næringsliv (DN) cleared its front page on Wednesday to report that the price of the wildly popular Tesla cars now may rise by as much as NOK 200,000 (USD 24,000 at current exchange rates) if Labour gets its way. The party’s spokesperson on financial issues, Marianne Marthinsen, thinks it’s time to reduce the amount of tax incentives electric car buyers receive on luxury models such as the Tesla.
Buyers of all electric cars sold in Norway currently benefit from a long list of incentives. They include an exemption from the country’s high one-time fee on cars (called engangsavgift) that contributes the most to how taxes and fees can double the actual price of a conventional vehicle. There also are exemptions from Norway’s VAT on cars including their equipment, while electric cars also avoid road tolls, ferry- and parking fees at publicly owned lots and garages. Electric car owners pay much lower annual vehicle registration fees, lower tax on company cars that are electric and have access to the express lanes on highways otherwise reserved for public transportation.
Incentives have worked
The advantages were introduced several years ago to encourage Norwegians to buy electric cars instead of those using fossil fuels, and they’ve worked: Norway is now one of the leading countries in the world in terms of electric car use. It’s the exemption on the one-time fee at time of purchase that’s long been considered the biggest advantage in opting for an electric car, and it’s also helped make Norway the biggest market for Tesla outside the US. The otherwise expensive luxury Tesla is relatively reasonable in Norway, since buyers haven’t had to pay the high one-time fee.
DN reported recently that Tesla buyers have effectively received subsidies amounting to an estimated NOK 2.3 billion since the cars first hit the market in Norway. After DN also reported that most Tesla buyers have high average incomes and include many wealthy businessmen and celebrities, Labour’s Marthinsen and some other politicians are concluding that the current tax incentives on high-priced electric cars like Teslas can’t continue.
“The most expensive Teslas should not be so strongly subsidized any longer,” Marthinsen told DN. She said Labour hadn’t decided exactly how much the “subsidy” should be reduced, but it’s likely to be capped at around NOK 500,000 of the price of an electric car. The buyer of a Tesla priced above that would thus have to pay full tax on the excess amount, which DN reported would boost a Tesla’s total bill by around NOK 200,000.
‘Technological shift’ achieved
“The current regime has been important up to now,” Marthinsen said, both to stimulate electric car sales and the “technological shift” to electric cars with much better batteries that can drive much longer and farther. “But now there are many more reasonably priced models coming on the market,” she noted. “The basis for the tax exemption on the most expensive models no longer exists. What’s most important now is to boost the volume of electric cars, so we want to maintain a strong tax subsidy on them, just not on the most expensive.”
Marthinsen also noted how Norwegian comedian Harald Eia, who appeared on DN’s recently published list of affluent Tesla owners, had told DN how he felt it was a bit unfair that he and other Norwegians with high incomes could drive fancy cars and avoid traffic queues on the highways because of state subsidies. “Harald Eia has a point,” Marthinsen told DN. “The Tesla is a fun toy for men who are very interested in cars, but it’s not them who will drive us towards our climate goals to reduce 10 million tons of carbon emissions by 2030.”
She also said that taxes and fees charged in Norway “must be regarded as reasonable among folks.” Many may not think it’s reasonable, she suggested, that Norway’s wealthiest car buyers enjoy big tax breaks on Teslas.
Others were quickly calling for even higher taxes on conventional cars using fossil fuels. “It’s fine if Labour wants to put a cap on the support for the most expensive electric cars,” Marius Holm, leader of the environmental foundation Zero, told DN, “but then it’s critical that they increase the fees on fossil-cars at the same time.” Henki Holmås of the Socialist Left party (SV), agreed “It’s clear that the Tesla subsidy must come down, but new fossil cars must then become more expensive.”
Finance Minister Siv Jensen of the Progress Party has declared that the government won’t make any changes in the current tax regime for electric cars. Climate and Environment Minister Vidar Helgesen of the Conservatives was more open to change. “I think we should continue the current policies because they’re working,” Helgesen told DN, but he added that “specific elements” within those policies “can be discussed,” along with how long they should remain in force.