‘Dramatic’ rise in driver fees threatens EV adoption — study

Source: By David Iaconangelo, E&E News reporter • Posted: Friday, September 13, 2019

EV charger. Photo credit: Fairfax County

State electric vehicle registration fees will exceed the gas taxes paid by 2025, according to a new report. Fairfax County

Drivers of electric vehicles are being unfairly singled out by states trying to replenish eroding funds for highway repairs, according to a new analysis from Consumer Reports.

The assessment is one of the first nationally to examine how state fees on hybrids and pure-electric cars stack up against those of their gas counterparts.

Overall, 26 states have either enacted or are contemplating fees on EVs — generally charged annually and on top of registration fees also paid by gas-car drivers. In some cases, the EV fees rise over time. The report considered fees that went into effect in eight states this year.

By 2025, 18 states will charge EV owners higher taxes than the average gas-car driver, the report found. In 12 of those states, the fee will reach levels considered “extremely punitive” by the firm — meaning EV drivers will pay at least 50% more.

The trend appears to be increasing: Seven of the high-fee states enacted new policies just this year, and 10 others are considering laws that would charge EV drivers more than their gas-car peers.

That “sudden, dramatic increase” in EV fees appears to have a partisan edge, with conservative-controlled states often pushing the steepest EV taxes, said Chris Harto, a senior policy analyst for transportation and co-author of the report.

In Wyoming and Arkansas, for instance, additional registration fees on EVs come out to about what a gas car would pay in fuel taxes if it got 13 mpg, the team found. Republicans control the legislature and governor’s seat in both states.

“We didn’t want to attribute motives, we just wanted to point out the trends,” said Harto. “But it’s hard not to see the coincidence.”

In many states, legislators from both sides of the aisle have supported additional fees on EVs. In Illinois, a Democratic proposal to impose a $1,000 registration fee on EVs made headlines and angered clean energy groups earlier this year (Energywire, May 14).

The fees are often seen as a way to patch up highway repair revenues, which have diminished as cars grow more fuel efficient. The biggest slice of revenues for highway repair — about 29% — comes from the gas taxes paid at the pump, usually per gallon. Hybrids generate less to state coffers, and all-electrics none at all.

But the Consumer Reports analysis found that over the next half-decade, special fees on EVs will do next to nothing to stop the drain on highway repair funds, even as they discourage sales.

The fees will contribute less than 1% of total state highway revenues by 2025, the report estimated, because electrics won’t make up more than a small slice of cars on the road by then.

“Our primary policy recommendation is, states should hold off on instituting an EV fee,” said Harto.

The team is agnostic on the larger question of how to replace highway revenues lost to the proliferation of electric — and potentially automated — cars. Harto said the solution would probably need to take into account the number of miles driven, among other factors.

That echoes the finding of a January report filed with the California Legislature regarding the effect of an annual $100 fee. Researchers at the University of California, Davis, said the fee would reduce sales of zero-emissions cars by 10% to 20% over the next few years and suggested a tax based on miles traveled (Energywire, Jan. 7).

“I’m not sure there’s a clear, obvious answer,” said Harto. “But we ultimately think this solution needs to take into account the actual usage of the roads.”