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Wednesday, July 17, 2024

Norway pulls plug on el-car incentives

After years of encouraging Norwegians to buy electric cars, state and local politicians are now pulling the plug on some of their tax and road toll incentives. It soon won’t be nearly as advantageous to drive Teslas, Jaguars and other high-end models if the Labour and Socialist Left parties get their way.

Tax and fee exemptions have driven electric car sales to record heights in Norway over the years. They now account for more than 60 percent of all new car sales, according to figures published last month by Norway’s national electric car association (Elbilforening). PHOTO: Norsk elbilforening

Labour had been at the forefront of tax incentives offered to promote electric car sales nearly a decade ago. The last left-center national government  pushed through lots of advantages that put the price of buying a Tesla, for example, at nearly the same level as a fossil-fuel SUV, since electric cars were free of Norway’s 25 percent VAT and lots of other punitive fees otherwise imposed on most all vehicles. Driving an electric car also saved motorists lots of money since an elbil (as they’re called in Norway) was also exempt from road tolls, parking fees, ferry fares and, of course, the high gasoline taxes charged on fuel for conventional vehicles.

Some of the free parking and road tolls have already disappeared in cities like Oslo, where politicians want to strictly limit use of all private vehicles. Street parking in many neighbourhoods has disappeared entirely, often replaced by bicycle lanes, and spots remaining are pricey and hard to find. Electric car owners have also had to start paying some road tolls, albeit much less than fossil-fueled and hybrid vehicles.

Now Labour and the Socialist Left (SV) want to start charging Norway’s 25 percent VAT on all electric cars costing more than NOK 600,000 (USD 64,000), which is roughly what many hybrid SUVs cost. The move, part of their proposals to the next session of Parliament, will make many popular electric cars more expensive, including the Audi e-tron S, Porsche Taycan, Tesla Model X and Model S, Jaguar I-PACE and Mercedes-Benz EQC.

That’s because VAT (called MVA or moms in Norway) would be charged on the price of the vehicle over NOK 600,000. A majority on the left-leaning Center Party’s platform committee also favours the same, although the party membership is divided. “There will be an interesting debate on this at our national meeting,” predicted the leader of Center’s parliamentary delegation, Marit Arnstad, to newspaper Aftenposten.

Its support or opposition may be decisive since Labour, Center and SV currently hold a majority in Parliament, according to recent public opinion polls, and may win government power away from the Conservatives-led coalition at next autumn’s election. The up-and-coming Greens may play an important role, too, although it’s not entirely supportive of the move on a national basis. It worries that there aren’t enough recharging stations, which are generally free in Norway, in outlying areas and only the most powerful and expensive electric cars have enough range. Most drivers also prefer or even need four-wheel drive in rural areas with lots of wintry weather.

‘Must be more fair’
The Conservative coalition generally wants to maintain lower taxes, while Labour and SV argue that the climate policy aimed at cutting car emissions “must be more fair.” That’s why Labour “proposes stopping the state’s subsidy of luxury consumption of electric cars and instead finance rapid-charging stations around the whole country,” stated Labour leader Jonas Gahr Støre when presenting his party’s alternative budget last week.

Since the move would mark a major change in SV’s policy, it prefers phasing in VAT on the amount exceeding NOK 600,000. The taxes that already double the price of a fossil-fueled car would be raised as well, under SV’s proposal.

Norway’s active electric car trade organization opposes any and all reductions of tax incentives and other car groups are skeptical, too. “We fear that these VAT proposals coming now are just the start of a wave of new fees on electric cars,” Christian Lagaard of Norges Bilbransjeforbund told Aftenposten over the weekend. “We understand that some taxes and fees will be imposed on them over time, but it’s too early now.” Berglund



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