Denmark’s latest policy u-turn is terrible news for Tesla

Prince of Denmark wonders if this Tesla is to be.
Prince of Denmark wonders if this Tesla is to be.
Image: Reuters/Stephen Lam
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Denmark, once a leader in policies aimed at combatting climate change, is pulling back from some of its most ambitious initiatives. In a new decision, the government may end its generous tax breaks for citizens who buy low-carbon vehicles, tripling the retail price of some electric cars.

A draft budget proposed last week would extend an existing 180% automobile tax to electric vehicles, reports Bloomberg, which notes that the price of a Tesla Model S would soar from about $97,665 (650,000 kroner) to $270,000 after the change. This will surely affect sales of electric cars, which have doubled in Denmark since one year ago, and deal a huge blow to manufacturers like Tesla.

Other countries have already seen the effect of high electric car subsidies change their market. A whole raft of tax breaks and incentives in Norway had to be rolled back earlier this year because they worked too well; electric vehicles now account for nearly a quarter of new car sales in the country.

In Denmark, electric cars make up a much smaller percentage of the market, but still a significant one for car makers. Danes have been the fifth most enthusiastic buyers of electric vehicles in Europe so far this year.

The raw numbers, however, largely reflect population size, and Denmark has just 5.6 million people. Their loss isn’t going to stop Tesla in its tracks.

More worrying is the signal that this and other policy changes send about climate change in general.

Denmark’s government has said it will also pull back from decommissioning coal-fired power stations, and reverse CO2 reduction targets. With a global summit on climate action coming up in November, other states may be wondering if Denmark is a bellweather, or merely subject to its own political storms.