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

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

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

source: Bloomberg