Tesla about to lose a big chunk of one of its most important markets, Norway

Ice age ahead: Model S in Norway (Picture: Youtube)

For electric carmaker Tesla, Norway is a paradise. Lavish tax breaks for electric cars, combined with expropriative taxes on gas cars (such as “total taxes for a Chevrolet Camarao V6? 125,000 dollars” as a Redditor writes) are the reason why nearly one in every ten Tesla cars go to the rugged and cold 5 million people country in Scandinavia. In yet another blow in a rough week, Tesla is about to lose its Nordic paradise.

“Norway plans to trim lavish tax breaks for Tesla and other electric cars that have given it the world’s highest rate of battery-vehicle ownership,” Reuters wrote today after reading a proposal by Norway’s right-wing government. At closer reading, one sees that the main target is Tesla.

The proposed regulation mainly affects large cars weighing more than two tons, while other EV tax breaks are kept intact.

The lightest Model S puts, if Google is correct, 4,469 lbs on the scale, which by sheer happenstance is two tons and 27 kilograms. A Model X, very popular in Norway where large stretches of roads are unpaved, weights in from 5,267 lbs, or 2,389 kilograms on up.

The heaviest Nissan Leaf, 2017 model weighs only 3,405 lbs, or 1.5 tonnes

Already, Norwegian media called the changes a “Tesla Tax”, and deduced that it is “intended to cut down on sales of luxury models such as Tesla’s Model X sport utility vehicle.”

Norwegian media estimated the tax could push up the price of a Tesla Model X by 70,000 Norwegian crowns ($8,850).

The man with the best handle on European car sales numbers is Matthias Schmidt, who provides the data and their analysis to clients in his subscription-only AID Newsletter.

“Wow, this is huge,” exclaimed Schmidt when I reached him at his Berlin office. Schmidt expects a serious degradation of Tesla sales in Norway, preceded by a Hongkong-like run-up in the months before the rule goes in effect – if it becomes law. “Any significant change to the highly generous Norwegian electric car BEV fiscal subsidies and other bonuses to electric BEV cars could seriously undermine Tesla’s business model,” Schmidt said

 According to the analyst, a Model S would remain a better deal in Norway than a Mercedes S-Class, but smaller and lighter EVs such as the Volkswagen e-Golf, the BMW i3, or the Nissan Leaf should dominate Norway’s sales charts even more than in the first three quarters of this year.

Tesla’s top seller in rugged Norway, the Model X, has the most to lose: It is very expensive, and so heavy that back home in the U.S., it can’t legally cross the Brooklyn Bridge.

For the Model S, Tesla has only the dual-motor 4WD version of the Model S in Norway.  “Norwegians are big fans of 4WD motors,” says Schmidt. “Last year, their total 4WD market mix was the second highest (37%) in Europe behind Switzerland (44%).” Schmidt believes that “if this two boundary comes into effect, I expect Tesla to offer the 2WD version in Norway again.”

The law is part of a draft 2018 budget, which still needs to be signed off by Norway’s parliament, and the minority government needs backing from other parties.