Climate

Why More And More States Could Start Considering Fees On Electric Cars

CREDIT: AP / Rick Bowmer

A Nissan Leaf charging in Portland, OR.

Electric and hybrid car owners in Michigan can breathe a sigh of relief. On Tuesday, Michigan residents voted no to Proposal 1, a referendum that would have imposed a $75 annual registration fee on electric vehicles and a $25 fee for most hybrid vehicles.

The proposal, which also would have amended the state constitution to increase fuel taxes, was billed as a way for the state to get more revenue to repair roads and bridges. Since hybrid owners buy less gas than owners of conventional vehicles, and electric car owners buy no gas at all, the state saw the proposal as a way to continue to get revenue from owners of more fuel efficient cars.

Proposal 1 may have pushed for a new fee on electric car owners, but according to Kristy Hartman, a senior energy policy specialist with the National Conference of State Legislatures, state policies on electric vehicles in recent years largely have aimed to benefit electric vehicle owners. In fact, she told ThinkProgress in an email, 37 states have adopted incentives to encourage consumers to purchase electric cars, such as tax credits, rebates, free parking, and HOV lane access.

“There is a continuing trend among states to offer some type of incentive to support electric vehicle adoption,” Hartman said. These incentives are still in their early years, as are the studies to measure their effectiveness, but according to Hartman, “it appears that states that offer a variety of incentives tend to have higher rates of electric vehicle adoption.”

Still, the failed proposal in Michigan represents the concerns some state officials have with regard to funding infrastructure. In most states, gas taxes are used to fund transportation infrastructure. With Americans driving increasingly fuel-efficient vehicles and driving less overall, states are experiencing decreases in gas tax revenue while facing constant transportation infrastructure demands. The American Society of Civil Engineers’ Infrastructure Report Card notes that there is an estimated $80 billion shortfall in funding for American roads.

“Gas tax revenues are a primary source of funding for transportation infrastructure, but the revenue hasn’t kept up with the transportation needs,” Hartman said. “Special fees on alternative fuels, such as electricity, are just one way that states are looking to boost needed revenue.”

Hartman said that that in the future, “we may see additional states at least propose new fees on electric vehicles.”

Here are a few states that have already adopted fees on fuel-efficient vehicles:

Virginia

In Virginia, all-electric vehicle owners pay an annual $50 license tax, in addition to an annual $64 alternative fuel registration tax. These taxes are almost $80 higher than those for cars getting 50 mpg, according to reporting by Green Car Reports. Virginia does have incentives for EV owners, including HOV lane exemptions and discounts from the utility company if the car is charged during off-peak hours.

Colorado

Electric vehicle owners in Colorado must pay a $50 fee annually to register their cars to be able to use public recharging systems. Unlike some other states, though, Colorado’s fee is largely viewed as a moderate approach that directs funds to both infrastructure and public electric vehicle charging stations. Additionally, EV owners and lessees can receive up to $6,000 in state tax credits until 2021. According to the Southwest Energy Efficiency Project, Colorado is the top state in the region for policies that promote electric vehicle adoption.

Georgia

Georgia has taken some of the strongest actions to tax electric vehicle owners to compensate for lost gas tax revenues. Last month, the state legislature voted to expire Georgia’s $5,000 tax credit and implement a $200 registration fee, which current owners would also have to pay. Critics immediately pointed out that these changes could have an impact on Georgia’s status as the state with the second highest ownership of EVs.

“Georgia’s diverse set of incentives have been credited—at least in part— for the boost in electric vehicle sales over the past couple of years,” Hartman said. “It’s unclear whether removing these incentives at a time when sales of electric vehicles are growing will hinder additional electric vehicle adoption in the state.”

North Carolina

North Carolina EV owners pay an annual $100 registration fee to contribute to the state’s transportation infrastructure funding. Owners of alternative fuel vehicles do receive benefits including HOV lane exemptions and sales and use tax exemptions.

Nebraska

Nebraska law mandates that owners of electric and hybrid-electric vehicles pay an annual $75 fee to register their vehicles. Revenues collected from the fee go towards maintaining Nebraska’s highway infrastructure.

Oregon

Oregon is currently piloting a program that would charge residents based on how much they drive. The state is installing equipment in 5,000 cars to record their mileage with the intention of charging a 1.5 cent-per-mile tax to owners. Under this program, owners would receive a credit against gas taxes, and the revenue raised would fund infrastructure projects to improve and restore Oregon roadways.

Washington

Washington owners of electric vehicles pay an annual $100 fee to register and renew the registration on their vehicles to compensate for lost gas taxes. In February 2015, the state legislature considered an amendment that would increase the registration fee to $150. Revenues from the $50 increase would be used to support a new program, the Electric Vehicle Charging Infrastructure Account, that would support public charging stations and other EV infrastructure throughout the state.

Erin Auel is a special assistant for the Energy Policy team at the Center for American Progress.