Denmark, once one of the fastest growing plug-in electric car markets in the world in 2015, has learned the hard way that its decision to re-phase in an import tax too quickly, has collapsed the country’s EV segment, and now looks to at least temporarily rectify the situation.
In 2015 sales of plug-in cars amounted 5,298 units, including 2,738 Tesla Model S. However in the subsequent year, just 1,438 were moved with Tesla taking the largest hit. The US EV-maker plunged to just 176 sales in 2016 (98-Model X, 78-Model S)
Sales in the first quarter of this year (2017) decreased by 60.5%, while the average inside the European Union increased by 30%, including a 80% gain in Sweden (“thanks to a wide range of subsidies, including a five-year tax break and a 40,000 kronor ($4,600) purchase premium”).
The cause of all those changes? The import tax of 180%, from which plug-ins were originally exempted.
In 2016 government launched process of phasing-out the exemptions (planned for 2016-2020), which resulted in December of 2015 surging through the proverbial sales roof…and then demand shriveled up thereafter (see chart below). . . .
“But on April 18, having taken note of the drop in sales, the government decided to change the rules. . . .
The new rules mean the transition to a post-subsidy era has been postponed until at least 5,000 new electric cars are sold over the 2016-2018 period. Tax breaks will in any case be progressively eliminated as of 2019, regardless of sales numbers. The plan envisages a 40 percent registration tax minus a 10,000 kroner ($1,500) deduction in 2019, with the tax rising to 65 percent in 2021, 90 percent in 2021 and 100 percent in 2022.”