US Congress proposes annual fees for EV and PHEV owners

The 119th Congress might be one of the most dysfunctional and least productive legislative sessions in the 250-year history of the United States, but it seems there’s one thing it can agree on: Electric vehicles don’t cost their owners enough money. The Transportation and Infrastructure committee has published its bill to fund surface transportation for the next half-decade, and among the provisions in the “Building Unrivaled Infrastructure and Long-term Development for America’s 250th Act” is an annual fee levied against owners of EVs.

“I’m extremely proud of the historic level of investment in America’s bridges—at more than $50 billion, it’s the largest such investment in our history. And the BUILD AMERICA 250 Act ensures that electric vehicle owners begin paying their fair share for the use of our roads,” said committee chairperson Sam Graves (R-Mo.).

Should the bill pass—and it enjoys support from the Democratic Party, too—you will be required to pay a $130 federal registration fee to drive an EV. And starting in 2029, that fee will increase by $5 each year until it reaches $150. Plug-in hybrids don’t escape untaxed, either; the fee for a PHEV begins at $35 a year and will escalate by $5 each year until it reaches $50 annually. And if state departments of transport don’t collect this federal EV tax, the federal government will “withhold an amount equal to 125 percent of the amount owed from the state’s highway apportionment.”

Why?

Road funding in the US is a messy business, paid for by a mix of federal and state gas taxes, state vehicle registration fees, and local budgets. And as the percentage of fuel-efficient PHEVs and gas-abstaining EVs grows, the amount of money available to pay for road upkeep drops. So, in the abstract, asking EV and PHEV owners to pay their share is not unreasonable, especially since the slightly higher curb weight of these vehicles will do slightly more damage to the roads, although passenger vehicles are a rounding error compared to a garbage truck, bus, or tractor-trailer.

Some states have already started imposing a registration fee on clean vehicles to offset reduced gas tax receipts. And at some point, when a significant proportion of the country’s vehicles are EVs or PHEVs, an alternative road-funding method that does not rely on the gas tax will certainly be in order.

But EV adoption in the US has taken a severe hit since the election of President Trump and the abolition of federal clean-vehicle incentives. As of now, EVs make up barely 3 percent of the entire vehicle fleet. Meanwhile, the federal gas tax has not been increased since 1993; had it been adjusted to keep pace with inflation, it would add an extra 42.34c to a gallon rather than a pathetic 18.4 cents currently.

“Drivers of gas-powered vehicles pay approximately $73 to $89 in federal gas tax each year. The proposed fee would charge an unfair premium on EV drivers at a time when all Americans are looking for ways to save money,” said Albert Gore, executive director of the Zero Emissions Transportation Association. “This is particularly concerning as the EV fee will increase to $150 by 2035—nearly double what gas car drivers would pay in a year. This fee lands on top of the road use taxes that many EV drivers already pay at the state level.”

“In addition to the new EV fee, the bill makes major changes to federal investments for dedicated EV charging. A lack of dedicated EV funding could particularly impact EV drivers living in—and traveling to—more rural and remote locations in the United States, where federal funding is most needed to help fill gaps in existing charging infrastructure,” Gore said.

“With Americans demanding more affordable transportation options as gasoline tops $4.50 a gallon, this bill would impose an onerous new fee on electric vehicles and plug-in hybrids while slashing investments in new EV chargers,” said Shruti Vaidyanathan, director of federal and state transportation advocacy at the National Resources Defense Council. “Congress should be boosting investments in projects that cut costs, cut emissions, create jobs, and build a transportation system that works for all Americans. This bill largely ignores the need to build cleaner, more affordable transportation options.”

We should perhaps be glad that the final version will cost drivers much less than Rep Graves’ last proposal, which started at $250/year for EVs and $100/year for hybrids.