Denmark Plug-In Vehicles Sales Tank As Subsidies Vanish



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.

CLEVER charging point in Denmark

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).

Weak results in 2016 and 2017 have caused further reflection to perhaps put a moratorium on the import tax, until sales rebound to the 5,000 unit level again or through 2018.  Bloomberg explains:

“But on April 18, having taken note of the drop in sales, the government decided to change the rules.

“It’s no secret electrical vehicle sales have been below what we expected a year and a half ago,” Tax Minister Karsten Lauritzen said in a statement. “The agreed phase-in has turned out to be hard and that likely halted sales.”

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.”

Plug-in electric car sales in Denmark (official and EV Sales Blog data) – December 2015

source: Bloomberg

Category: GeneralSales

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19 responses to "Denmark Plug-In Vehicles Sales Tank As Subsidies Vanish"
  1. Josh Bryant says:

    I am pretty sure the tax on vehicles is sales tax not import tax, and applies equally to all regardless of original. Denmark doesn’t build cars, so I guess it is semantics.

    The Danes I know have always referred to it as a sales tax though.

    1. Alex Pierce says:

      It’s a “Vehicle Registration Tax” of 105%-180% depending on the price of the vehicle (all current Tesla’s are firmly in the 180% range). That tax is applied to the price of the vehicle. Then there’s another 25% VAT tax on top of that.

      Denmark’s previous EV incentive waived the Registration Tax (but not the VAT), which was a HUGE savings.

      With the sudden and marked decline of EV sales, there are motions underway to reform the EV incentive and have it slowly taper off as EV prices grow more in-line with ICE car prices, instead of having the incentive vanish completely.

  2. FISHEV says:

    Hong Kong, Tesla loses 3% of total sales. Denmark Tesla loses 1% of total sales. Georgia in the US, EV sales tank when the subsidy is removed.

    Musk keeps stating subsidy doesn’t matter but we see that it does matter. Even to Tesla which currently sells to luxury market which is more insulated on price issues.

    EV’s need to be 100% of car sales by 2035 so that by 2050 100% of cars on the road are zero emissions. US needs to double Federal tax credit to $15,000 and extend it to allow it to be taken over five years with no mfg. limits.

    1. DJ says:

      I am sorry but that is ridiculous. A better way to spend $15k is just to give everybody solar panels for free on their house or solar farm for city dwellers.

      1. FISHEV says:

        That should also be done but because homes use electric and gas for heating, their relative emissions are low vs. the cars running on gasoline and Diesel. 12% for residential and commercial vs. 27% for transportation.

        The current Federal tax credit for residential solar is 30% of the install vs. just 10-20% for cars.

        It’s not an either/or it’s both. Incentives for solar power on homes and businesses and for EV cars that can on the solar power.

    2. SparkEV says:

      Why limit to 5 years? About half the US didn’t pay federal income tax. Better would be indefinite time to claim the credit. It’s an incentive to have some tax liability (eg. work), which will be paid even after the credit is all used up for that person’s EV purchase.

      As for $15K, get rid of stupid programs like CA’s $70B high speed rail, and just CA could giveaway that much for 4.7M EV. Is it better to have one rail system that cost millions in on-going operating cost, or 4.7M EV subsidized without on-going cost? Smart money would be on EV, but we know the politicians are the dumbest group in population, especially CA politicians.

      1. FISHEV says:

        “As for $15K, get rid of stupid programs like CA’s $70B high speed rail”

        High speed electric rail helps cut transportation emissions substantially while helping with congestion on roads and airports.

        All there things need to be done simultaneously.

    3. mxs says:

      Imagine Musk being wrong about something … sounds like impossible to me.

      1. Elooney Muskey says:

        Subtle difference between being wrong and lying through the teeth with a straight face.

  3. SparkEV says:

    Denmark as Paris signatory may have to bring back the subsidy. It might be much cheaper than other measures to cut CO2, at least for the short term.

    1. Josh Bryant says:

      Denmark has almost no CO2 to get rid of. They are about 75% wind power and half the population rides bikes due to the car tax.

      1. SparkEV says:

        That’s my point. Because they already emit so little (relatively speaking), cutting even more would cost a bundle. Subsidizing EV might be cheaper (or cheapest) by comparison to other measures.

  4. JR says:

    Envy killed the Electric car marked in DK
    Paying 100.000 dollars for a Tesla or any car in DK is expensive.
    Think that the most popular car in DK is VW UP mini car. (12.000 dollars), in DK it is always better to have a smaller car than your neighbour. or better to bicycle!
    Expensive and big cars are a rare sight in DK, so it was making the headlines that this expensive electric car was a present for rich people, that did not have to pay tax, and government was loosing billions every year (that actual byers of the car was mostly people with middle income, that saw a change to get a big and save car is another story, but that is not so interesting for the media)
    So government had to do something, came up with this plan to TAX the expensive car with a higher TAX and the smaller electric car price did not change very much in the new TAX system!

    1. FISHEV says:

      Do what CA did, put an income limit on the tax credit.

  5. SteveSeattle says:

    Although this a big hit for Tesla in DK it is not huge on a global scale. If all incentives disappeared Tesla would survive with less sales, but most incentives elsewhere are no where near as large as in the smaller markets of DK, HK and Norway.
    Plus incentives will not disappear all at the same time, which gives them time to adjust.

  6. Peter says:

    “The cause of all those changes? The import tax of 180%, from which plug-ins were originally exempted.”

    As a Dane and the one who originally tipped InsideEVs about this more than a month, before Bloomberg wrote about this, I must say there’s no 180% tax on any cars here, EV or not.
    Here’s the link to an article in English from Copenhagen Post I tipped InsideEV about a long time ago:
    Where’s my hat tip? 😉

    An it’s not an import tax, but a registration tax.
    The registration tax in 2017 for regular ICE cars is 105 % of the car value up to DKK 106,600 and 150 % of the car value above that threshold. It used to be 180% of the value above the threshold, but starting November 20, 2015, the taxation of the car value above the threshold was lowered from 180 % to 150 %.

    And it’s not a 40 % registration tax of the car value for EV’s in 2017 either. Instead for EV’s you have to pay 40 % of the calculated 105 % – 150 % tax an ICE of the same value would be taxed at, minus a DKK 10,000 deduction.

    Even though it all looks complicated, all of the above is actually a simplied version of the actual registration tax, which is extremely complicated to calculate for regular people.

    Because there’s all kinds rebates and penalties added on top of that, depending on the cars fuel consumption + extra safety and environmentally friendly features.

    For example for gasoline cars the tax is raised DKK 1,000 for every km the car drives below 16 km/l based on the official test standard. And the opposite for every km the car drives more than 16 km/l, you get a DKK 1,000 deduction.
    For diesel cars the base number is 18 km/l instead of the 16 km/l for gasoline cars.
    Here’s all the rules straight from the the Danish tax authorities (in Danish):

    1. Tom says:

      All those numbers have 2 more zeroes than the US. Sales tax, registration tax, whatever. In my state there is a 3% sales tax on automobiles…not 103% then every year you pay registration fee but it is $30 not 30%. $30 (it can be as high as $100 though!). Soooo… are still talking about more than doubling the price of a vehicle with your tax structure regardless of semantics on what it is and pointing out it is only 105% or whatever still doesn’t knock a 0 off that number. That’s insane taxation which likely in a small country geographically works quite well. It causes urbanization which in general is more efficient. Here we are spread all over literally. Even modest shifts relative to your tax structure would change things dramatically here. For instance all this talk of tax incentives, etc would be a completely moot point if the US just put a big old $4/gallon gas tax on. The economy would take a gut punch at first but structural changes would take place in how we do stuff.

  7. Jason says:

    Subsidies are a joke. Better, but political suicide, to tax the petrol and diesel pollution machines. But which government had the balls to do that? Make ICE pay what it is really worth, remove all subsidies from oil, add the health and military costs, and then let’s see if EV’s stack up against ICE vehicles.
    It would be interesting if one of the research agencies did this comparison.

  8. Peter says:

    BEVs will soon get much smaller and cheaper. Smaller EV cars will be the huge market in the near future look at China and India.
    Most people will be driving very small cars in the near future.
    EV cheap in production and service and fuel.
    I love big cars but big will be expensive to buy and own.