A report indicates that Norway is considering ending or reducing some of its incentives for electric cars because the scheme has been almost too popular.
According to Automotive News Europe, the finance ministry is currently conducting a review of its automotive and fuel taxes, which will be complete before the federal budget is announced in May.
This review, it’s speculated, may recommend that the government reduce the incentives given to Norwegians who purchase pure electric vehicles.
Currently EVs are exempt from automotive sales tax and VAT (value added tax). Thanks to these exemptions, in Norway the Nissan Leaf begins at 229,600 krone ($37,700) undercutting the entry-level Euro Pulsar hatchback by 300 krone ($50).
Electric vehicles are also granted bus lane access, reduced annual registration fees and other on-going tax concessions, as well as free entry onto all of the country’s toll roads and congestion charge zones.
The country’s generous EV incentives were introduced near the beginning of the decade. In addition to hopefully giving EVs a sales boost, the legislation was aimed at helping out the country’s indigenous electric vehicle makers, such as Think.
While Think and other local electric car makers have since fallen by the wayside, sales of EVs have accelerated in the last few years. In 2013 around 10,000 EVs were sold in Norway, with the figure jumping to about 25,000 in 2014.
The Nissan Leaf, Tesla Model S and the electric variants of the Volkswagen Golf have all figured regularly at the pointy of the sales charts, sometimes topping it entirely. Indeed, the Model S broke the country’s sales record for most cars sold in a calendar month back in March 2014, when 1493 electric sedans found new Norwegian homes.
NPR notes that the country’s legislators aimed to have 50,000 electric cars on the road by 2017. When either that date passed or the target amount was reached, it was envisaged that the incentive scheme would be would wound back or scrapped.
The country crossed the 50,000 mark on April 20 when a black Tesla Model S was bought and registered. Some estimate that the country’s EV incentives have shrunk the government’s revenue by as much as 3 to 4 billion krone ($490 to $660 million).
Unlike most other nations, Norway currently produces almost 100 percent of its electricity from hydroelectric power plants. Today, electric cars account for around one percent of all vehicles on Norway’s roads. If that sounds unimpressive, remember that in the USA, EVs total only 0.07 percent of the entire vehicle population.