There’s an excellent piece on Bloomberg from earlier this month entitled Denmark Is Killing Tesla (and Other Electric Cars).  Essentially, Denmark has exempted all electric cars from taxation, which is pretty significant in a country where traditional, gas-fueled cars are taxed at 180%.  (Yes, that’s right 180%, almost tripling the price.)  Unsurprisingly, this made electric cars pretty appealing, and sales skyrocketed.

So, when the government then decided to gradually phase out that huge tax break, sales plummeted.  Rather than seeing this as a righting of the market, however, the government backed off.  Uh, oh.  That hurt electric car sales.  Better undo that.

Seriously?!  How is anyone surprised by this?  As North Carolina has proved with solar energy, you can get a lot of anything if you subsidize it heavily enough.  And exempting one kind of car from such a heavy tax is effectively a subsidy.

Laerke Flader, head of the Danish Electric Car Alliance, sums it up well toward the end of the piece:

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”

Sounds kinda like what we’re constantly promoting here at the John Locke Foundation.  Low taxes are important, but level playing fields and predictable, stable taxes for business are even more so.