EV Fees Punitive to EV Drivers, Consumer Reports Says

Date: September 12, 2019
Source: Automotive News

While many states are looking into imposing fees on electrified vehicles to boost transportation revenue, a Consumer Reports analysis released Wednesday found that such fees cost EV drivers more than traditional vehicle drivers pay.

State legislators see annual fees on hybrid and electric vehicles as a way to offset gasoline tax revenue lost from having more of those vehicles on the road. Hybrid and EV drivers pay the fees in addition to registration fees they already pay.

But according to the Consumer Reports analysis, existing and proposed fees on electrified vehicles in 26 states are up to four times higher than the annual gasoline tax would be for the average new car in 2025.

For the study, Consumer Reports compared existing and proposed electrified vehicle fees across the country with gasoline taxes paid by the driver of an average new gasoline-powered vehicle.

Fees in Arkansas and Wyoming force EV owners to pay the equivalent of the gasoline tax paid by a vehicle that gets 13 mpg, according to Consumer Reports. The annual fee in Arkansas, for example, will be $200 for all EVs and $100 for plug-in hybrids starting in October.

The highest proposed fees are in Missouri and Arizona, which would force EV buyers to pay the equivalent of the gasoline tax paid by vehicles that get nine to ten mpg, Consumer Reports says.

"Clearly the trends are not favoring the gas tax both in terms of fuel economy and inflation, and those two forces are really what's driving down the revenue and what's causing problems for states," said Chris Harto, Consumer Reports senior policy analyst. "Right now, it's not EV adoption."

Consumer Reports also estimated the effectiveness of using fees on electrified vehicles for increasing highway funding revenue.

Though fees contribute to state highway and transportation department funds, according to Consumer Reports, proposed fees on electrified vehicles are expected to generate only an average of 0.04 percent of current state highway funding.

That's because fees the drivers of electrified vehicles pay are more than what traditional vehicle drivers pay through the gasoline tax, but EVs accounted for only about 2.1 percent of the new vehicles sold in 2018.

"The revenues they're generating are kind of minuscule. They may stay minuscule in some of the states where they have really high fees because they're going to discourage adoption in some of those states," Harto said.

"States with lower fees are often generating more revenue as a percentage because those states also happen to be encouraging EV adoption in other ways," he added, but it isn't enough to make a large difference in transportation funding.

The report suggested states consider other road-funding approaches that are more uniformly applied to all vehicles.

Arkansas Department of Transportation spokesman Danny Straessle told Automotive News the state expects to raise $2 million from higher registration fees for hybrid and electric vehicles, a policy he said started as a fairness concept.

"These vehicles use the roads and subsequently contribute to the overall impact," Straessle said, but "they aren't contributing to the maintenance and upkeep of the system."

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