Iceland: Green cars are a hard sell despite $7.50-a-gallon gas and free juice for EVs

Two of the all-electric cars I saw during a week-long vacation in Iceland were a Nissan Leaf, above, and a BMW i3, below, both parked in Reykjavik. They were the exception, not the rule, despite gas selling for about $7.50 a gallon.

By VICTOR E. SASSON
EDITOR

REYKJAVIK, Iceland -- Iceland would appear to be ideally suited for the transition to electric and electrified cars.

This island nation, with a population of 344,000, imports all of its oil and gasoline, but generates 99.99% of the electricity it needs from renewable sources -- water, geothermal and wind.

And in January, the city of Reykjavik pledge to install 60 charging stations in downtown parking garages and at paid parking spots that will allow anyone to plug in free of charge. 

That's in addition to a total of 105 charging stations along the ring road and in major towns (42 of them will be rapid-charging stations).

By next year, the goal is to ensure there will never be more than 100 kilometers (62  miles) between stations, according to Iceland Magazine.

Iceland also exempts the first $47,000 of an electric car's price from the Value Added Tax (25.5%), which essentially makes them tax free and competitively priced with similar sized combustion-engine models.

EV owners also get 90 minutes free parking downtown.

EVs on the street

But I saw only a few dozen electric, plug-in and hybrid cars during a week-long vacation in Iceland, including one Tesla Model S and one Model X.

Surprisingly, the most common all-electric car was the Nissan Leaf, and they outnumbered the ones I've seen in northern New Jersey, where I live.

Two all-electric BMW i3s, a Mitsubishi SUV Plug-In Hybrid, a couple of French hybrids and lots of older Toyota Priuses rounded out the green-car sightings.

At a Toyota dealer outside Reykjavik, a new Prius gas-electric hybrid was selling for about $44,000 -- considerably higher than the MSRP of around $25,000. A salesman blamed most of the difference on government taxes.

The Costco Wholesale near the Toyota dealer was giving members a discount on a 2017 Hyundai i20 Premium, a four-door hatchback with a list price of about $26,900. The Costco member price was around $24,470. Costco's gas station also sells gasoline and diesel fuel for much less than competing stations.

High taxes

With gasoline selling for around $7.50 a gallon, you'd think Icelanders would be knocking down dealers' doors to buy more all-electric, plug in and hybrid cars.

But high government taxes boost the cost of a new hybrid or plug-in electric car significantly.

And then there is the public perception that the country has no charging infrastructure to support EVs.

The strangest comment I heard came from a tour guide named Helgi, who said Icelanders welcome global warming, because it has moderated the island's terrible winter weather.

Yet, Iceland Magazine reported in January "the share of new electric and hybrid cars in Iceland [is] the second highest in Europe."

For more on Iceland, see: 

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