As of November 2023, more than half of all states are now charging owners of electric vehicles special fees, over and above the normal annual registration fees paid by other drivers. Many of these fees extend to hybrid and plug-in hybrid vehicles as well.
My home state of Virginia, for example, charges a Road Use Fee, based on the EPA miles-per-gallon. As fuel efficiency improves, the fee increases, topping out at around $117 for electric cars. Texas imposes a whopping $400 fee on electric vehicles, while Alabama and Arkansas charge a flat $200 on top of normal registration fees for electric vehicles, and $100 for hybrids.
At the very same time many states are offering financial incentives to buyers of electric vehicles. Colorado, for example, offers up to $5000 tax credit to buy or lease an electric vehicle, while also charging a $50 additional annual registration fee for those vehicles.
So what is going on?
States are balancing competing interests. The pool of money allocated to incentives is not the same pool of money allocated for maintaining roads and infrastructure.
States need the income from fuel taxes to maintain their transportation infrastructure, and are all too aware of the risk to the state’s economy when roads and bridges fall into disrepair. With improved vehicle mileage comes decreased fuel tax revenues. To make up for the loss of revenue, states have a couple of choices. They can increase fuel taxes, or they can impose new taxes to make up for lost revenue.
No one likes tax increases, and lobbyists from the trucking industry, oil companies, and political interests make raising taxes an uphill battle.
The other alternative is to impose new taxes, ones specifically targeted at the source of lost revenue. Lawmakers may face resistance, but can make a good case for the fairness of the taxes they impose.
Another reason states are adding these fees is to help cover the cost of building the infrastructure necessary for electric vehicles. Range anxiety is still the top reason most new car buyers hesitate to purchase electric vehicles. States that want to encourage the move to electric vehicles are building charging stations in more remote areas, and near public facilities. Electric car fees generate revenue, while at the same time targeting only those drivers most likely to benefit from the move to electric.
As the owner of a hybrid, I was initially angry at the fees I got hit with at registration, but when all is considered, most drivers of fuel efficient vehicles will accept the fees as a necessary cost of making the choices they do. In the long run, the infrastructure will be in place as the number of electric and electric assisted vehicles continues
Does your state charge fees for high efficiency vehicles? Click Here to see a list of what each state charges, or if there are new taxes working their way through your state’s legal system.