Norway Considers Taxing Electric Cars Based On Vehicle Weight
Norway charges a tax on new cars that can double the list price. Heavier, more powerful cars pay more. The tax on smaller, less powerful cars is more modest. But electric cars are exempt from the tax entirely, which is one of the primary reason electric cars in Norway are so popular.
Norway also confers a number of other benefits on electric car owners, among them free charging in many cities, access to HOV lanes, and reduced tolls for the country’s many bridges and tunnels. Taken together, they make buying an electric car a no brainer.
But all those subsidies cost the government a lot of money in lost revenue every year. Now conservatives are proposing to impose a one time fee (another name for a tax) to register an electric car in Norway. The fee would be based on the weight of a car, the theory being that heavy cars cause more wear and tear on the nation’s roads. Only cars that weigh more than 2 tons would be affected.
The fee could add as much as $12,000 to the price of a Tesla Model X while the Model S would pay a fee of about $5,000. Cars that are close to the 2 ton threshold would be charged about $900.
The proposal has caused an angry backlash among electric car advocates. Christina Bu, head of Norway’s Electric Vehicle Association calls the one time charge on new electric cars over two tons a “tax bomb,” according to Norway’s VG News.
“The government knows very well that many car manufacturers take this step to develop the electric cars with more space and increased range due largely to interest from customers in Norway. The new one time fee will make it more difficult to get families to buy electric cars. And it will be more difficult to reach the…..goal of selling only zero emissions cars by 2025,” she says.
John Helmersen, head of operations for Jaguar in Norway says about 1000 Norwegians have paid a $1,300 deposit to get on the waiting list for the new Jaguar I-Pace electric SUV. He claims the new fee would cost buyers about an extra $3,500.
Stuff and nonsense, sniffs State Secretary at the Ministry of Finance, Jørgen Næsje. “Typical family electric cars are not affected by the introduction of a one time fee. We also do not know that new family cars are being launched that are so heavy that they will receive a one time fee. Both the Opel Ampera and Tesla Model 3 will be [exempt].
“That heavy luxury SUVs that cost over $130,000 get any fee is quite reasonable and it provides a good social profile. The Jaguar which weighs just over 2 tons…..will hardly get the big fee. Those who can afford to buy such expensive cars can pay a small one time fee for new car purchases.”
It is regrettable that Norway is considering pulling back on some of the programs and incentives that make purchasing an electric car so popular, but the fee, if and when one is enacted, will still amount to far less than the tax buyers of conventional cars have to pay. Many Norwegians consider this idea more of a negotiating strategy the conservatives are using as discussions about the next national budget get under way.
Still, it is a signal that the benefits electric car buyers currently enjoy won’t last forever. In fact, many of them are scheduled to lapse in 2020 anyway as the country struggles to find the proper balance between promoting electric cars and fiscal responsibility.
Perhaps a hint this was coming led to the extraordinary number of Tesla automobiles registered in Norway for the first time in the third quarter of this year. In fact, an amazing 900 Teslas were registered in the last week of the quarter alone.
The conservative’s plan has been labeled a “Tesla Tax” by opponents. Perhaps there is some truth in that. The high price of Tesla’s Model S and Model X definitely put them out of reach for many Norwegian families. The rationale for the plan is that heavy cars put more strain on roadways, but heavy cars also tend to be more expensive cars.
California has reconfigured its incentive program for electric cars to provide more benefits to low income buyers after many complained that making it easier for rich people to buy expensive cars was unfair. Proposing a fee based on weight is a way of taking a swipe at the wealthy without coming right out and saying so.
In any event, the Tesla Model 3 is coming soon enough and will have the sort of range Norwegians say they crave. But it will be light enough to avoid most if not all of the new fee, whatever it turns out to be once the budgetary process is completed.
There is every reason to believe that Norway will continue to be one of Tesla’s strongest export markets, with or without a one time fee that applies at the time of purchase. After all, paying an extra $5,000 for a Model S is still preferable to ponying up $85,000 more to buy a conventional Mercedes S Class.
Source: Reuters Hat Tip to Leif Hansen