This Is What Happens When You Kill Electric Car Tax Breaks

The little country of Denmark should have some of the strongest electric car sales in the world. It's easy to get around, it's all relatively affluent and it has plenty of clean electricity from wind power. But Danish electric car sales have faceplanted down 60.5 percent so far this year compared to last. All that's changed is that the country killed one of the biggest tax breaks in the world for EVs.

Denmark holds a punishing 180 percent import tax on cars with internal combustion engines. EVs have been exempt from this tax for years, but in 2015 the Danish government started rolling tax exemptions back, including phasing out this EV break, as Bloomberg reports:

In the fall of 2015, the Liberal-led government of Prime Minister Lars Lokke Rasmussen announced the progressive phasing out of tax breaks on electric cars, citing budget constraints and the desire to level the playing field.

Tesla, whose sales were skyrocketing at the time, lobbied against the move, with Chief Executive Officer Elon Musk warning during a visit to Copenhagen that sales would be hit.

The new tax regime "completely killed the market," Laerke Flader, head of the Danish Electric Car Alliance, said in a recent interview. "Price really matters."

This appears to have scared the shit out of Danish regulators, as they're now rolling back their rollback of tax breaks. As of April, Denmark has announced it will only start its next phase of making electric cars more expensive starting in 2019, working through to make them just as taxed as gas cars by 2021.

The question of outright cost is one thing, but the problem of governments changing the price of alternative-energy cars up and down is what really messes with my head. I'm not the only one, as Bloomberg notes:

Flader said electric car dealers have rolled back their sales drive as a result.

The electric car industry "doesn't want to invest in a market that may not be there next year. They'd rather invest where conditions are better and predictable long-term," Flader said.

It's amazing to me that the formula for bringing up electric car sales still hasn't been cracked after all these years.