- The Washington Times - Wednesday, June 12, 2019

States are losing gas tax revenue on hybrid and electric cars, but their efforts to raise registration fees on those vehicles for road maintenance projects is meeting opposition from environmentalists and auto manufacturers.

Over the past three years, 14 states have enacted annual fees for hybrid/electric vehicles (EVs) ranging from $50 for plug-in hybrids to $200 for fully electric cars, according to the National Conference of State Legislatures. All total, 20 states currently have some sort of EV fee above and beyond normal car registration costs.

Lawmakers in Texas and North Carolina are making the latest push to increase fees for EVs, whose U.S. sales last year jumped to about 1.6 million from just a few hundred thousand in 2014.

“Right now, they [EVs] don’t pay any gas tax from the purchase of electricity, and they’re using our roads,” North Carolina state Sen. Jim Davis said about the legislation he introduced to “bring parity so that everybody is contributing their fair share to the gas tax revenue.”

Environmentalists are questioning not just the fees — which they say discourage people from buying EVs — but also the parity argument.

“I understand the gas tax is a hot topic, but the current paradigm that North Carolina has in place more than makes up for lost gas tax revenues,” Peter Ledford, general counsel for the North Carolina Sustainable Energy Association, told The Washington Times.

North Carolina EV owners have paid a special annual registration since 2013, with the price rising to $130 two years later.

Mr. Davis’ proposal would expand fees from just EVs to hybrid vehicles. Additionally, the amount due to the state would slowly rise in a formula tied to inflation.

Fee supporters say the moves are needed to assure steady income to the N.C. Department of Transportation, which receives about 40% of its annual $2 billion in revenue from the state’s 36.2 cents-per-gallon gas tax.

Federal gas taxes, which contribute to state infrastructure funds across the country, have not changed since 1993.

Mr. Ledford and others say lawmakers are unfairly targeting hybrid/EVs, and cite recently released figures from a state clean energy agency which found that the $130 fee North Carolina’s almost 12,000 registered EVs currently pay more than makes up for lost gas taxes.

“The state is essentially disincentivizing the adopting of these vehicles,” Mr. Ledford said.

Environmental groups, including the Sierra Club, have made similar points, arguing that states scramble to offset declines in fuel tax revenues by targeting vehicles that use no gas because they have smaller constituencies — as opposed to increasing gas taxes or adding new toll roads — which cause widespread voter anger.

Automakers also have voiced concern, including the Alliance of Automobile Manufacturers, which includes Ford, GM, Fiat Chrysler, Toyota and electric carmaker Tesla.

The national growth of fees, the National Conference of State Legislatures points out, is a reversal from recent years that have seen 34 states provide incentives to encourage citizens to adopt vehicles that use less fuel, including tax credits, purchase rebates, HOV-lane access and free parking.

While hybrid/EVs account for only about 1% of all cars sold in across America today, their market share is quickly growing, which experts say will add even more pressure on states.

Swedish carmaker Volvo is moving to phase out all gas-powered cars and earlier this month BMW announced a project to work with Jaguar Land Rover on EVs.

According to a recent Bloomberg analysis, as hybrid/EVs become even cheaper to make, their sales should reach 11 million in 2025, surge to 30 million in 2030 and make up more than 50% of new U.S. auto sales by 2040.

• Dan Boylan can be reached at dboylan@washingtontimes.com.

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