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Is Subsidy Driving Tesla Motors Inc (TSLA)’s Sales In Norway?

Tesla Motors Inc (NASDAQ:TSLA) saw its sales peak up to 1500 units in the Scandinavian country of Norway this March which also happened to be the highest number ever for any car manufacturer in the country. Cost plays a major role in deciding the sales worthiness of a car and the sales figures of the electric car manufacturer had experts puzzled. The Tesla Model S is priced around $70,000 in the United States while its Norwegian price translates roughly into $100,000, which is no insignificant amount by any standards.

Tesla Motors Inc (NASDAQ:TSLA)

Norway takes its green status pretty seriously and strives to work towards keeping itself as environment friendly as possible. To this end, electric cars like the Tesla Motors Inc (NASDAQ:TSLA) Model S enjoy special subsidies.

There is no annual registration fee or sales tax for the vehicles and people who drive electric cars for a living are eligible for income tax deduction. There is an additional clause which states that all these subsidies will become void as soon as the total number of electric cars in the country crosses the 50000 mark, and it is this clause which is primarily responsible for driving Norwegians into owning a Tesla Model S now rather than sometime in the future.

The cumulative effect of these subsidies results in a huge price difference between a Tesla Motors Inc (NASDAQ:TSLA) Model S vehicle and a gasoline driven car with comparative features. Norway is a wealthy country trying to maintain its green status and makes use of its sizable government fund to entice its citizens to switch to more eco-friendly options, but the origin of this so called ‘sovereign wealth fund’ is questionable.

It is a small country and home to about 5 million people. It used to be a country of farmers and fisheries but all that changed in the early seventies when oil reserves were found along the Norwegian coast. It is ironic that Norway’s eco-friendly journey is driven by its oil money.

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