Carolina Curious: Squaring The Gas Tax With Electric Vehicles
In 2016, the number of registered plug-in and battery-powered vehicles around the globe jumped 60 percent from the previous year, and there’s no slowdown in sight. But the thing is, since they run on electricity, they don’t use gas and that means no gas tax.
So, with all of these new automobiles taking to the roads, a WFDD listener would like to know: “How do owners of electric-powered vehicles pay their fair share for use of the roads as compared with gasoline and diesel-fueled vehicles?”
Before we get too carried away with the electronic vehicle (EV) revolution, here are some numbers. Current EV sales make up just a little over 1 percent of market share in the U.S. But, plunging lithium-ion battery prices mean that soon—perhaps eight to nine years from now—EVs will be cheaper to buy than gas-powered vehicles. According to Bloomberg New Energy Finance, that means they’re currently on track to make up more than 50 percent of the market by 2040.
That’s a lot of battery-powered vehicles on North Carolina roadways. And maintaining those roads isn’t cheap. Motor vehicle sales tax and registration taxes help pay some of the costs, but the largest source of funding is the motor fuel excise tax (or gas tax). In North Carolina, that’s 39 cents per gallon. The Federal gas tax is 18 cents per gallon bringing the total to 57 cents.
So, are EV drivers getting a free ride, leaving combustible engine drivers to foot the road maintenance bill? No, says Advanced Energy spokesman Jonathan Coulter.
Recently the North Carolina legislature, through statute 20-87 has increased the registration cost of owning an electric vehicle to $130 a year to try to have more of a presence for road maintenance—fees covered from electric vehicles that do not need gasoline—in addition to the gasoline-powered vehicles that provide road maintenance fees through every gallon of fuel that’s purchased.
That’s $130 on top of sales and registration taxes. Plus, given that EVs are more expensive on average than gas-powered vehicles, EV drivers are paying a higher sales tax than most gasoline-powered car drivers to begin with.
And yet, gas-powered versus EV controversies remain. Some motorists—like lighter-weight EV drivers for example—argue for road maintenance fees being based on the weight of the vehicle. They contend that big, heavy vehicles do more damage to roads than lighter EVs, so they should pay more. Other drivers would rather pay a flat fee at registration. And still others propose a fee based on mileage alone. Coulter says it's complicated.
This is one of those industries that has certainly multiple stakeholders and multiple perspectives and [you're] trying to juggle the technology with legislative and policy issues and to try and make it so everybody’s happy.
Coulter believes the $130 registration cost is appropriate for now.
I think that it falls somewhere in the median. If an internal combustion driver gets 20 miles-per-gallon, then they could drive about 7,400 miles before they would equalize that $130 vehicle charge. Or, if a car driver had a 30 miles-per-gallon vehicle fuel efficiency, that would be over 11,000 miles traveled before that $130-dollar equivalent fee was reached.
And according to the American Automobile Association, motorists in the South drive more than in any other region of the country, averaging 11,826 miles-per-year. Just enough to keep the gas tax debate alive and well in North Carolina for many years to come.