Some states are requiring electric vehicle owners to pay extra registration fees as part of a move to recoup lost revenue on gas taxes. In one state, a new senate bill requiring added costs for EV registration is set to become effective on September 1, and 32 other states feature similar fees.
Texas Governor Greg Abbott recently signed Senate Bill 505, which institutes a $400 fee on EVs when they’re first registered, along with a $200 renewal fee each year after, according to a report from CNET. The news is just the latest in states requiring EV owners to pay extra registration fees, due to the lack of a gas tax often used to repair and maintain the roads.
“As more of these vehicles drive on Texas roads, there are concerns about how they contribute to the funding of the roads which they use,” said Republican state Senator Robert Nichols, a sponsor of SB505.
The Dallas Morning News reported that the fees could generate over $38 million in revenue, while the Texas Highway Department is expected to bring in $2.8 billion in fuel taxes.
“The problem the diversification of car fuels presents to this old system of road funding is that now the burden of paying for roads is shifting toward people who have internal combustion engines,” public policy analyst Rob Moore wrote in the Ohio Capital Journal. “This poses concerns for both equity (considering mostly wealthy people own electric cars now) and efficiency (considering those people can now free ride on payments being made by others).”
The fees span the spectrum from as low as $50 to as high as $225, according to the National Conference of State Legislatures (NCSL) which released an updated list of the states with EV fees in March. Some argue that the move for Texas and other states to charge an additional fee to EV owners may slow down mainstream adoption of zero-tailpipe-emission technologies.
“The Texas Legislature is pouring sugar in the tank of the electric vehicle revolution,” said Luke Metzger, executive director of Environment Texas. “[It] will make it harder for Texans to afford these clean vehicles which are so critical to reducing air pollution.”
Senior transportation analyst for Consumer Reports Chris Harto points out that the tax regulations may not fairly consider how much individuals drive. Some states have already started discussing the potential for mile-measured fees, instead of instituting a flat fee. In either case, according to Harto, the tax may not be as fair as some think.
“EV drivers are a small minority, and they’re easy to pick on,” Harto said. “Raising the gas tax is politically very challenging. But an exorbitant tax on cars that people consider luxury vehicles owned by the rich is very easy. And politicians can cloak it in the idea of fairness.”
“A ride-hailing driver with a Tesla who goes 50,000 miles a year pays the same amount as a low-income driver with a Nissan Leaf who only drives 3,000 miles a year back and forth to work,” Harto added.
“We’re not against these fees in principle. But there should be [vehicle-miles traveled] tax or user fee that accounts for the amount people drive — and that is applied equally to all powertrains — so you don’t have different people paying different amounts depending on the kind of energy they use.”
Following is a complete list of the states with special taxes on plugin hybrid electric vehicles (PHEVs) or battery-electric vehicles (BEVs). You can find more details about each state’s fee requirements on the NCSL website.
STATES WITH FEES FOR PHEVS AND BEVS
- North Carolina
- North Dakota
- South Carolina
- South Dakota
- West Virginia
Note: *Texas EV fees will become effective on September 1, 2023