How Tesla Conquered Norway

Between Sept. 1 and Sept. 9, Tesla (NASDAQ:TSLA) and its Model S not only outsold every electric vehicle in Norway, but every other car, period. The VW Golf has been the best seller in Norway for months, but Bilnorge.no reported that in roughly the first week of this month, the market shares of the nation's top three cars were the Model S (6.1%), the Golf (4.9%), and the Mazda CX-5 (4.2%).

Of course, Tesla just started delivering its cars in Norway, so most of those vehicles were purchased -- or rather, reserved -- months before. Lots of Tesla enthusiasts in Norway are still waiting for their reservations, according to Tesla's forum, and the 133 cars which are already on the road will certainly stimulate sales.

Since Norway is a very condensed market, Tesla is betting on its new costumers to create an exponential effect, in which each car on the road results in more sales. Model S owners are known for being very protective of the Tesla brand; in some cases, they prove to get better results than Tesla's actual sales force. During the last annual shareholder meeting, Elon Musk talked about some instances where Model S owners closed as much as a dozen sales/reservations, and he hinted at a possible referral program for owners after a shareholder brought it up. 

The Model S isn't the only hugely popular electric car in Norway. Nissan (NASDAQOTH:NSANY) sold 448 units of its all-electric Leaf last month to lead the electric car market in the nation, with 3.8% of Norway's total automotive market.  The Japanese car manufacturer will certainly see its share of the market fall in September, since it's the first full month of delivery for the Model S in the country. 

Since gas is expensive in Norway, and the nation offers numerous government incentives to buy electric vehicles, Tesla expected to be popular there. The Model S is almost tax-free, and electric vehicle owners have access to free public parking, toll-free ferry service, and almost no annual fee. 

To meet the expected demand for its cars, Tesla installed 6 supercharging stations throughout Norway, and opened three stores, with two others under way. 90% of Norwegians now live within 320 km of a supercharging station, well within the 500 km range of the Model S.

Source: Tesla's Twitter

This is good news for shareholders, because Tesla's $20 billion market cap is based on multiple future executions, including the company's goal to deliver 40,000 Model S's next year.  Tesla pegs U.S. demand for the Model S at about 20,000 units a year, but Europe's response is more difficult to predict, even though it is a similar market in size. The numbers coming out of Norway are very encouraging, indicating that Europe's demand for the Model S might prove pleasantly surprising. At the very least, the high price of gas in Scandinavia could drive better-than-expected Tesla sales there. 

I remain bullish on the stock, and I recommend investors keep a close eye on the gross margin of the Model S and the number of cars Tesla delivers in the third quarter. Ultimately, by ramping up production and securing better prices from suppliers, Tesla should achieve a 25% gross margin. It needs to get to 19% during the current quarter in order to stay on track for 25% by the fourth quarter.


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  • Report this Comment On September 12, 2013, at 5:09 PM, speculawyer wrote:

    Well . . . keep in mind that Norway is massively wealthy from oil AND they have huge incentives for EVs. So selling a luxury EV in Norway is shooting fish in a barrel.

    But I love the way Norway follows the drug dealer maxim: "Don't get high on your own supply." (In regards to the fact that they are oil producers that are not addicted to oil.)

  • Report this Comment On September 12, 2013, at 6:20 PM, j1rose wrote:

    would you run 50 miles out of your way to get charged . tesla should install 50 + more chargers

  • Report this Comment On September 12, 2013, at 6:26 PM, RustySlade wrote:

    At the end of 2009, 53,000 more cars were registered than one year earlier. The private car population expanded by 45 000 cars and the population of vans by 8,000. The number of cars scrapped for refund fell by almost 13,000.

    A total of 2,241,119 private cars and 387,546 vans had Norwegian number plates at the end of 2009. The increase was 2 per cent for private cars and 2.2 per cent for vans.

    Norway's tax breaks on the purchase for electric cars are worth almost $11,000, or $1,400 a year over a car's lifetime, according to a study by Statistics Norway analyst Bjart Holtsmark.

    Commuters driving into Oslo from the surrounding areas save an annual $1,400 in road tolls, can get free parking worth $5,000 and avoid other charges of $400.

    It all adds up to as much as $8,200 per car, per year, before taking account of the benefit of driving in the bus lane rather than sitting in a queue with other cars.

    The simple fact this was so easy to find and the author left it out shows how biased and uninformed they are.

  • Report this Comment On September 12, 2013, at 6:44 PM, jeffhre wrote:

    jirose, the chargers are designed to facilitate convenient long distance travel with minimal stops between cities.The vast majority of charging is in the owners garage. Over 200 miles available each morning.

    Followed by charging at work, then charging at destinations. Those will not be provided by Tesla.

  • Report this Comment On September 12, 2013, at 6:50 PM, EdwardInFlorida wrote:

    The anti Tesla detractors are running out of excuses. Oh wait...they'll just invent new preposterous ones to replace the old that can't hold even a drop of water! LOL!

  • Report this Comment On September 12, 2013, at 7:16 PM, FredericLambert wrote:

    @RustySlade

    "The simple fact this was so easy to find and the author left it out shows how biased and uninformed they are."

    Get over yourself. I mentioned "numerous government incentives" I just didn't go as much details as you did.

  • Report this Comment On September 12, 2013, at 8:27 PM, shawnconrad wrote:

    I thought they meant the rock group from Sacramento. LOL. You know, Love Song, Little Suzi, etc. Thats the only reason i clicked on. LOL

  • Report this Comment On September 13, 2013, at 6:03 AM, tesladaytrader wrote:

    The author of this comment is clueless imo.

    He talks about incentives that are just "another good reason".

    What is the real driver in Norway sales? (other than that it is the best car in the world).

    "Engangsavgift" (one time car fee). it is a "luxury fee on cars" and it is massive. A 550bhp BMW M5 has a "engangsavgift" of almost $200 000 USD, so the base price in Norway is kr 1980 000 NOK. That is the same as $335 303 USD. A new M5 costs $90 000-100 000 USD in USA.

    My fully specced Tesla costs kr 760 322,- NOK = $128756 USD.

    It is exempt from "one time luxury car fee" VAT (value added tax, called MVA in Norway 25 %)

    If the Tesla had a 416hp gas engine the taxes would have brought the price up to:

    kr 1 718 782,- NOK = $ 291 067 USD.

    Where kr 760 322,- / $128 756 is the car price and $162 310 USD is the luxury one time registration fee and VAT.

    It is only in Norway we have this one time luxury car fee called "engangsavgift".

    No other european country has this, they have 25 % VAT though so Tesla Model S is the only car worth owning that is cheaper in Norway than in the rest of europe. (since we don`t even have VAT).

    All electric vehicles is 100 % exempt from taxes in Norway.

    So you can buy 4 Tesla Model S for the price of one BMW M5 in Norway. That is the main reason that Tesla`s second biggest market after the US is Norway.

    What is the one time luxury fee composed of?

    Its 3 - part. you pay for the weight of the car, you pay for the co2 emissions of the car and you pay especially for the horsepower of the car.

    Model S tax breakdown Norway:

    MVA / VAT = $ 32 189 USD

    Weight = $ 33 190 USD

    Horsepower = $ 64 600 USD

    Co2 emissions = $ 31 864 USD

    Total fees = $161 843 USD.

    Exemption for electric vehicles = 100 % discount.

    Needless to say, I bought one and it is delivered next week ;)

  • Report this Comment On September 13, 2013, at 6:13 AM, tesladaytrader wrote:

    I am fully aware that the Tesla does not have any Co2 emissions, I used the emission numbers from a comparable car (BMW 550i with 408BHP and 242g co2/km). As the Tesla is 416 BHP and would probably have a higher co2 emission then that.

    So that is what the Tesla would cost if it had a comparable gas engine and was not exempt from taxes.

    Price of my Tesla Model S Performance with all extras would be:

    $ 291 067 USD

    It is with the tax exemption:

    $ 128 756 USD

    Is it the best car deal in Norway ever? Yessir.

    Is it possible this exemption from taxes will expire? Yes, after 2017 the government will do a new evalution on the EV benefits and tax exemptions.

    Will a change hurt Tesla sales in Norway?

    It can`t get any better than this, so it`s only one way from here and it is down...

    It can be exempt from the luxury car fee for a long time, maybe even forever (climate reasons).

    But sales tax/VAT/MVA (25 % tax for all merchandise in Norway) that will probably not last forever.

    So when the price goes up by 25 % that will hurt sales a lot, and if the luxury car fee exemption expires it would almost shut down Tesla`s operations in Norway.

    This is not likely though, but it definitly is a big risk.

  • Report this Comment On September 13, 2013, at 6:45 AM, cchadp wrote:

    So 10 days in a year...and catchy headlines. I recall back in the early '90s it was said that in the auto market every new entrant gains some market share..even Yugos sold back then. Not to say this is a Yugo (lol) but to use 10 days in 365 days to make up a suggestive story is ridiculous. Analyze moving 10 day periods through the year and see which automaker is number one in several markets. Bogus.."get over it" article. Registered just so I could post at this fool-ish fool site.

  • Report this Comment On September 13, 2013, at 6:47 AM, cchadp wrote:

    Author is not 'clueless'...all articles come in relentlessly day in and out...same with AAPL..you can guess why.

  • Report this Comment On September 13, 2013, at 8:15 AM, AjitC wrote:

    By 2017, Tesla can sell a lot of Model S+X and nearly saturate the market. What kind of incentives does the rest of Scandinavia have?

    Even if some of the incentives are gone, Gen 3 at $35k should sell well, especially if more superchargers are installed and even reach places like Narvik.

    What are the domestic electric power rates in Norway? Where I live in the southern US, it is about 8 cents/KW-hr retail. What is the availability of public chargers in the cities? Capacity?

  • Report this Comment On September 13, 2013, at 8:23 AM, AjitC wrote:

    The big challenge in Europe will be Germany. Densely populated wit 80M. A lot of sections of their Autobahns have hi speed driving which drains batteries. Too dangerous to drive slow. 85 KW-hr will be lucky to last 200 Km. SCs will have to be spaced 150 Km appart.

  • Report this Comment On September 14, 2013, at 1:54 PM, Keezje wrote:

    Kidding? I know highways in all of Europe and have driven many thousands of kilometers in Germany. Perfectly safe to cross the country at 120 km/h, no worries. But true, Germany will be the big challenge; not exactly early adapters when it comes to changing automotive. Scandanavia, Austria, Netherlands will lead the(ir) way.

  • Report this Comment On September 16, 2013, at 8:07 PM, ojnord wrote:

    This is easy. It's called LOVE, and then deliverance. Tesla has made a promise, and it now delivers. We probably have not seen a phenomenom like Tesla Motors since Steve Jobs' highdays at Apple. As an experienced marketing manager I enjoy the branding and the conscious playing out of the cards as the weeks roll by. Of course, for investors it all comes down to shareholder profit eventually, by share gain and pay-outs. That's the way of life. But for us Norwegians, we could not enjoy a car more, finally taking full use of our waterpowered cheap electricity, and enjoying a clean exhaust free long ride across the country. At homebase, we don't need supercharges - as we recharge at home and at work. The no toll nor VAT policy on EVs of the government have proved to be a main driver in shifting the whole car market. Still we pay a stiff price for normal income levels even here. But if the newly elected right goverment keeps the policies in place, the $40,000 extra price to an average consumer car will be "paid back" in around 10 years. Call it consumer investment and risk-taking. And hey, when new battery technology is available, the S-model is built to change the battery pack.. TM has not played out that card yet, but just watch! (Currently I drive the Norwegian brand Buddy, 3 seats, with old lead tech batteries, just for reference)

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