Denmark planned to start phasing out a tax-free allowance on electric vehicles (EVs) next year, though the country’s latest budget passage will officially postpone those plans.
To help keep the country’s tax-free allowance on EVs in place, the new budget calls for as much as 200 million kroner (~$30 million) going toward the program from 2024 to 2025, according to a statement made on Monday in a report from Automotive News Europe. The original plan was to gradually phase out tax discounts on zero-emission vehicles through 2030, but the budget deal was agreed upon by 11 out of 12 parties in the country’s parliament.
The tax allowance is widely considered to have factored into what has made Denmark a leader in EV adoption, though the country still falls far behind Norway, a nearby country and the world’s swiftest adopter of EVs.
The budget also includes added spending on things such as green investments and welfare, which the government says will have a neutral impact on the economy overall.
Statistics Denmark data shows that about one-third of new passenger car sales in the past year have been battery-electric, representing an increase of 19 percent from the prior 12-month period. According to the Danish Car Importers Association, this figure is expected to surpass 50 percent in 2024, especially given the new budget.
Currently, Denmark has over 177,000 EVs on its roads, representing around 6.3 percent of all passenger cars across the country. Tesla announced in September that it had surpassed 50,000 vehicles in Denmark, with the leading Model Y earning around six times the sales of its closest competitor in the country earlier this year.
Last week, the refreshed Tesla Model 3 was also named the Best Car You Can Buy in Norway, though the company has recently been facing issues from the union IF Metall in the neighboring country of Sweden.
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