Norway will study possible changes to the incentives for electric cars

In front of Norway’s 50,000th electric car pose, on the left, the director of the port of Drammen, Einar Olsen, and, on the right, the secretary general of the national association of electric car owners, Christina Bu. Photo: Ståle Frydenlund

The calculations have come true. Early this week, a Tesla Model S 85D in metallic grey became the 50,000th electric vehicle sold in Norway. The saloon from the Silicon Valley manufacturer received the registration plate “EL 60000“. The first car of this kind registered in the Nordic country bore the plate “EL 10000”, which is why the figures do not match. The delivery of this unit is a source of joy for its owner, but it has also reignited the controversy surrounding the generous incentives that the Norwegian government grants to buyers and owners of electric cars.

The legislation that provides for them, in force since 2012, planned to keep them until 2017 or until the 50,000th vehicle was registered. The second limit has been reached three years earlier than expected. The pace of sales has become so high that Norwegian Finance Minister Siv Jensen has already announced that the government will consider changing those tax advantages in the coming weeks. The final decision will be confirmed next month once the budget has been debated in Parliament.

The high sales in Norway of the Tesla Model S, a car that is not exactly cheap, have been frowned upon by those who disapprove of keeping the tax advantages.

The Norwegian Finance Minister acknowledged in 2014 that the incentives cost the public purse up to 473 million euros in annual losses.The incentive programme has been the subject of criticism especially since last year. The blame was attributed, in particular, to the Tesla Model S. The Californian electric car, whose prices in Norway start at 65,000 euros, has been flying off the shelves since its introduction to the Norwegian market in 2013. A reputation that, according to the head of the Ministry of Finance in 2014, costs the public purse annual losses ranging between 3,000 and 4,000 million crowns –352 and 473 million euros at the current exchange rate-.

With 5.1 million inhabitants, Norway is already known around the world as one of the main paradises for electric models. It is the country with the largest number of these vehicles per capita. Its sales accounted in 2014 for a fifth of the total of these cars registered in Europe -19,767 out of a total of 97,791 units, according to ACEA data-.

The Volkswagen e-Golf ranks second among the best-selling electric cars in Norway.

Norwegian owners of electric cars pay no tolls or parking fees in public car parks.The range of benefits associated with buying and using them is enviable to many: they are exempt from several of the high taxes levied by the Norwegian government, among them VAT, and their drivers are permitted to use the bus lane -thereby slowing down traffic, in the view of several bus drivers-, pay nothing for parking in public car parks, nor for tolls or for using public battery charging points.

In Parliament there is an uneven division of opinion. The detractors of this idyllic paradigm for electric vehicles, such as the spokesman of the progressive party, Gjermund Hagesæter, are outnumbered by other politicians in favour of keeping the advantages, among them the head of the Transport Committee of this body, the conservative Linda Hofstad Helleland.

Five electric cars parked on a street in Oslo. Photo: Wikipedia.

The national association of electric car owners cites the 2% that these vehicles represent in the Norwegian fleet as a reason against eliminating the benefits.Supporters of continuing to promote sales of these vehicles see, however, options for adding nuance to the legislation. For example, that local authorities rather than the central government should decide case by case on aspects such as free parking or the use of high-occupancy lanes.

The position of the Norwegian association of electric car owners -in Norwegian, the Norsk elbilforening– weighs heavily in the debate. Its secretary general, Christina Bu, warned last year that it is “still too early” to withdraw the tax incentives because the supply of these cars cannot compete on equal terms with that of models powered by combustion engines.

The association also points out that these cars make up only 2% of the total existing in Norway, a very marginal amount that would not justify removing the benefits. In a country where the taxes that taxpayers must pay are much higher than those of other countries, preserving this kind of “relief” for their finances takes on considerable relevance.

Source | Norwegian Electric Car Owners’ Association, HybridCars and Reuters