Electric Car Sales In Denmark Plummet After Change in Tax Policy

 

Denmark offers us the latest proof that regulations and government policy are not the keys to the electric car revolution. Until the end of 2015, electric cars were exempt from Denmark’s whopping taxes on new cars, which can reach as much as 180% of the sales price. Not surprisingly, sales of electric cars were booming.

2016 Nissan LEAF electric car





Then the government decided to rein in its generous incentives. Startting January 1, 2016, electric car buyers were assessede a tax equal to 20% of the purchase price. Sales in December were the best ever, as Danish citizens rushed to take advantage of the old zero tax rate. 1,588 electric cars were sold in that month — the highest number ever in this tiny country.

In January, only 68 cars were sold in Denmark. Since then, things haven’t gotten much better. Through the end of July, a total of 1,332 clectrics have found new homes in Denish driveways, a drop of nearly 80% compared to last year. Taxes on conventional cars have been reduced, making them less expensive when compared to EVs. Things will get worse on January, 2017 when the tax rate doubles to 40%. By 2020, the advantage for electric cars will expire entirely.

The Danish experience tracks what happened in Georgia recently. Until June 20, 2015, Georgia had the highest elecric car incentive in the nation at $5,000, but the Georgia legislature voted to end it as of July 1, 2015, After that, dealers couldn’t give electric cars away. Sales of the LEAF plunged from more than 1,000 a month to just 66 in August.

We have touched on this subject often here at Gas2. Our position is that ending subsidies on fossil fuels is more effective at promoting market decisions that benefit all of society than regulations that mandate people to buy certain products or incentives that benefit only a few. Making the price of fossil fuels accurately reflect their true cost to society — including the health care costs associated with their use — is the most intelligent way forward toward a sustainable world.

Source: E24 Norway  Hat tip to Leif Hansen

 





About the Author

Closely following the transition from internal combustion to electricity. Whether it’s cars, trucks, ships, or airplanes, sustainability is the key. Please follow me on Google + and Twitter.

  • Marcel

    Governments should gradually increase taxes on fossils like some did with tobacco. This is a good solution that should have been put in place long ago but as always some politically involved individuals decide to ignore it and ruin a whole planet just to save a few pennies for “their people” or in some cases for themselves and their entourage.

    • Steve Hanley

      Could not agree wtih you more, Marcel.

    • kevin mccune

      This action will make the “conservatives ” somewhat happy ,the only thing some of them hate more then higher taxes are electric vehicles .

      • Tim Jonson

        I’m as conservative as they come, and it disgusts me to see government ruining one more thing. You don’t speak for conservatives, I love electric cars, and stop trying to deflect the subject at hand here, which is how awful your socialist governments can be.

        • kevin mccune

          ,I call them as I see them,tell me how Rush feels about renewables ,most conservatives are wealthy or misinformed ,no one is trying to deflect anything.The people that have made them wealthy need to share in the largesse and I dont want to hear that BS about about self made wealth ,very few rich people I know run a charity and by the way some socialist govts seem to work pretty well ,not all of them are pathetic .

  • Michael

    The problem is that removing EV incentives and simultaneously removing incentives throughout the fossil fuel cycle is a good economic incentive for those who can afford to change their cars, it disproportionately affects those with low incomes, many of whom are already driving the oldest and leads fuel efficient vehicles, and who cannot afford the transition to a new EV. The impact on them is compounded by poor public transport almost everywhere outside Europe.

    • Steve Hanley

      You make some valid points. I am in Italy at the moment, where I have travelled by train for the past 2+ weeks. If the US had train service like this, I would use the train much more often.

      Quiet, comfortable and almost always on time. It’s addicting!

      • Michael

        I’m in Italy as well, well Sicily. Even Sicily has better trains than Australia:(

        • Steve Hanley

          I check on Google and Sicily is definitely part of Italy! ; – )

          Oddly, I have found the trains in Oz to be first class. If what Tim says is true about population centers being too far apart is true, for some reason the same logic does not applyu Down Under where the distances between cities is enormous.

      • Tim Jonson

        The USA never will. It’s population centers are too far apart for passenger trains to work out economically. It’s a well-know fact, google it.

        • Michael

          Bring on the hyperloops:)

  • Tim Jonson

    Imagine living under a government which seeks to make it almost impossible to own a car. SICK! WTF????

    • Michael

      It works when public transport infrastructure is extensive and when most people live in compact cities that are just as quick to travel through on bicycle. Of course bicycles are far safer when there are less cars