Denmark may reconsider tax incentives for electric cars

Denmark may reconsider tax incentives for electric cars

Denmark’s Prime Minister Lars Lokke Rasmussen said in a recent interview in Copenhagen said that the country may reconsider financial incentives to promote the purchase of electric vehicles (EVs). The fast growing electric vehicle segment still needs government subsidies as the cost of ownership of EVs is considerably higher compared to conventional vehicles.

The statement by Rasmussen has come against the backdrop of the fact that the sales of non-polluting vehicles has plunged dramatically in the country in the last couple of years, especially after the phasing out of EV subsidies -- similar to the subsidies being offered by the authorities in Norway and Germany -- by Rasmussen’s center-right government.

In terms of specific figures, EV sales in Denmark have dropped to just around 700 units in the year 2017, as compared to 5,000 units in 2015.

The drop in EV sales in Denmark is apparently a result of the fact that the incentives to purchase ‘green’ vehicles, instead of the traditional vehicles powered by fossil-fuels, have eroded due to the government’s indiscriminate cuts to registration taxes.

With Denmark not having a domestic auto industry and with import duties fairly high in the country, the government’s move to phase our EV subsidies has met with a lot of criticism. However, hinting that the subsidies are being reconsidered by the government, Rasmussen said in the interview: “We have tax incentives for electric cars, and you could discuss if they should be bigger.”