The government parties and SV in the Storting have agreed to introduce VAT for purchase amounts over NOK 500,000 for electric cars from 1.1.2023. The support for electric vans will be raised from 30 to 40 percent of the additional cost by choosing electric.
Here you can read BIL’s comment:
An era is over
It was announced and it was expected. The VAT exemption on electric cars has made Norway a pioneer in electric mobility, and has benefited both the green shift, consumers and the industry well. Soon there will be history. Ida Krag, head of communication and government contact, Bilimportørenes Landsforening
We must not maximize the crisis. Ideally, BIL had seen that the VAT exemption went up to NOK 800,000 and that the phasing in would only start from 2024. The Hurdal platform and the majority’s party program formulations had admittedly moderated our real expectations somewhat. But that the government should undercut its own platform formulation that there was a purchase amount over 600,000 kroner to be charged VAT, only half a year after the platform was written, well it was both surprising and awkward.
After the government parties’ settlement with SV in the Storting, we are sitting with the facit. It is not ideal. But VAT exemption up to NOK 500,000 is manageable, and will hardly lead to violent setbacks on the way to the 2025 goal. We are particularly pleased that SV has put in place the wording that the VAT exemption of NOK 500,000 will be kept unchanged until 2025. This provides the long-awaited predictability.
The settlement also states that: “In connection with the introduction of purchase taxes for electric cars, it shall be ensured that the competitive advantage of electric cars in all passenger car segments is maintained”. This is bad news for diesel, petrol and rechargeable hybrid cars, and difficult to interpret as anything other than a warning of increased tax pressure in the years to come.
Leasing rush What is really urgent now is to make room for the framing. The Ministry of Finance was well under way with the work of framing the subsidy scheme that the government itself proposed in the revised National Budget. When the governing parties in the Storting and SV now agree to scrap that model and instead go for a bottom deduction model, some of the cards must be shuffled again.
In particular, the handling of leasing raises challenges that the bureaucrats in the Ministry of Finance now have to face. Finding a device that takes care of and balances different considerations, and at the same time is possible for the consumer to navigate, is demanding. Constantly new subscription and leasing solutions with different lock-in periods further complicate the picture.
For the industry, it is important to clarify how this is to be resolved as quickly as possible. We are clear that ongoing agreements must be shielded. At the same time, many agreements have already been entered into where the car will not be delivered until after the New Year. And for all agreements that are to be entered into until the framing is clarified, customer communication is, to put it mildly, demanding.
Van light spot For electric vans, today is a small bright spot. In the settlement, the majority in the Storting instructs the government to inform Enova that the support for the electric vans will increase from 30 to 40 per cent of the additional cost of choosing electric.
BIL has no doubt that a cash grant would have been a new better solution, and whether the increase is sufficient remains to be seen. But, it is at least a clear step in the right direction, and a signal from the parliamentary majority that the 2025 target for electric vans has not been forgotten. As long as the technology on electric vans does not deliver four-wheel drive and the possibility of a heavy trailer, we need powerful incentives.
The green shift on the roads Apart from the fact that the phasing in of VAT starts a little too early and with too low an impact point, the development is both announced and expected. As an industry, we must recognize that it is not unreasonable for electric cars to pay anything. It is nevertheless a crossroads that the news that electric cars will start paying purchase taxes comes at the same time as the “whole” world of electric cars is gathered in Norway at EVS35 and the focus is on the Norwegian electric car success.
As an industry, we are crucial to whether Norway will be able to deliver on its climate commitments. If we are to deliver, we need framework conditions that are adapted to the ambitions. We are under pressure. The public transport industry is calling for electric cars to pay more in toll booths and for parking in cities. The government is investigating various concept choices for road use and tolls, which can quickly become proposals for road pricing. Modern mobility is changing.
Then it is appropriate to remind that it is the sum of tolls, both on the purchase and use of a car, that makes the difference to the pace of the green shift on the roads. Predictable changes, made with small steps are crucial also in the years ahead.