Following the European release of electric vehicle manufacturer Tesla Motor Inc.’s fully electric Model S in August, the expensive luxury car has defied expectations and rocketed to the top of sales charts in Norway. The Model S is the latest from electric vehicle front runner Tesla Motors whose vehicles have been the attention of a great deal of demand since it introduced its very first model, the Tesla Roadster, in 2006, making it the first all-electric sports car. However, one major hindrance to Tesla’s achieving anything nearing market dominance has always been its high price, the luxury vehicles which used to routinely go for over €80 000.

The Model S, however, was Tesla’s first true attempt at mass producing a vehicle aimed at reaching a wider customer base than its previous luxury model. Upon its release in the United States, the Model S, which retails for just over €51 000 in the United States, was already a significant milestone in Tesla’s evolution, selling upwards of 14 000 units in the US alone in its first year of deliveries compared to the Roadster’s sales which amounted to roughly 2 500 units over four years.

Nevertheless, few would have expected the extent of Tesla’s success in Norway, where the Model S has already overtaken the country’s leading seller the gas-fuelled Volkswagen Golf, achieving a remarkable 5.1% share of the Norwegian auto market. Despite beginning at a retail price of €74 000, with the country’s notoriously expensive auto market making the car €25 000 more expensive than in the United States, second-hand Model S’s have already reached a staggering €96 000 in some cases.

With the seemingly ludicrous retail prices of these luxury EVs ruling out all but the most wealthy or truly committed electric vehicle enthusiasts in most markets, what is the secret to Tesla’s enormous success in Norway? The answer, effective automotive tax legislation. Norway’s government has set in place legislation which levies vehicle taxes on fuel-burning cars based on engine size, a factor which encourages car buyers to direct their attention towards either vehicles with smaller conventional engines or full-EVs and hybrids. As a result of these taxes, a brand new, vehicle with a conventional engine of the same size would retail for up to €148 000. Add to this the not insignificant costs of fuelling a gas-fuelled car with Norway’s gas prices hardly looking likely to decrease, the initial shock some buyers may feel at first glance of the Model S’s retail price, may ultimately come to feel unwarranted when they add up the savings in store for them over the years with a car that does not need to be filled up at the pump every day, but one which you can just plug in at home and take advantage of the notably lower price of electricity.

Source: Article from Reuters 

Read More: In-depth report by the Globe & Mail 

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