Tesla might face trouble selling its electric cars in Denmark as the government there has imposed new taxes that will make electric cars expensive. Now a similar policy move that will seriously affect the sales figures of electric car makers like Tesla, Nissan and BMW is under consideration in Norway, says a report from CNN.
Denmark, Norway important markets for Tesla
Electric cars have always had a price advantage over fuel-powered cars, but this will eventually be eliminated after the increase in taxes. Tesla gets around 10% of its global sales from these two countries. Denmark will be the first one to make this move as it has decided to phase in sky-high registration taxes on zero-emission vehicles applicable from Jan. 1 onward. A Tesla Model S that is available for $100,000 today will be sold at $280,000 in the next five years when the tax hikes reach completion.
Tesla’s Model S is the most popular electric car is Denmark, and therefore, such taxes are seen to be terribly bad for the U.S. firm. LMC Automotive, a market intelligence firm, reports that in the first nine months of 2015, the company sold 849 vehicles to Danish customers. There is a strong possibility for things to get even worse.
Adverse effect on Model S sales
An expert panel comprised of Norwegian economists and legal professionals approached the government last week with a request to phase in new taxes on electric and hybrid vehicles.
Lars-Erik Borge, the lead economist behind the new tax policy recommendations, said, “This preferential treatment of electric cars is heavily debated. There isn’t any universal agreement that the system should be as generous as it is today.”
Norway is a major market for Tesla, and it has already sold 3,600 cars in the country so far this year. Overall, the company is aiming to sell 50,000 vehicles globally. Losing generous tax breaks in the country involves a lot of risks, and the company knows it well. In its most recent annual report, Tesla said if the government reduces or eliminates such programs or the benefits, then it will have an “adverse effect” on sales of all electric vehicles, including the Model S. The tax recommendations made by the panel are still under consideration, and the Norwegian government will make the decision about whether to accept them or not in October 2016.