Authorities in Norway have proposed revisions to the incentives offered on electric vehicles (EVs), which could potentially setback Tesla’s European goals. The country has been a significant market for Tesla, with the company having a strong presence there for over 12 years.
‘The Goal Has Been Achieved,’ Norwegian Authorities Say
In September, battery electric vehicles accounted for over 98% of total vehicles sold in Norway. Following this achievement, the country’s authorities stated that the goal to transition to fully-electric vehicles “has been achieved.” As a result, the Finance Minister announced that it is time to phase out the benefits.
Norway had previously exempted taxes on EVs applied to internal combustion engine (ICE) powered vehicles. However, a 25% Value-Added Tax (VAT) was introduced for EVs priced above 500,000 Kroner (approximately $49,500). A revised proposal now suggests reducing the cap to under 300,000 Kroner (roughly $29,700).
How It Could Affect Tesla
The reduction in tax incentives could affect Tesla’s sales in the Norwegian market. The company’s Model Y, which was the best-selling model in the country, retails for 389,990 Kroner (approximately $38,600). Meanwhile, the Model 3 retails for 324,990 Kroner (approximately $32,200), meaning none of the Tesla vehicles currently qualify for the incentives.
The rolling back of incentives could impact Tesla’s sales in a market that has traditionally been pro-Tesla. The company has been present in the Norwegian market for over 12 years and was the first country outside North America where Tesla introduced the Model S.
Tesla’s European Operations
The news comes as Tesla’s Gigafactory in Texas announced it reached the 500,000 units produced milestone. The factory primarily produces the Model Y and the Cybertruck. Additionally, Tesla’s Gigafactory in Germany will be ramping up production, citing positive feedback and increased demand from the markets it supplies to.
The changes in Norway’s tax incentives may pose a challenge to Tesla’s market lead in the country. However, the company’s expanding production capabilities and growing demand in other markets may help mitigate the impact. As the electric vehicle market continues to evolve, companies like Tesla must adapt to changing regulatory environments and consumer preferences.