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High registration fees discourage the adoption of electric vehicles

You may have noticed an increase in the adoption of electric vehicles in your area. Consumer Reports says that number would be higher, but high registration fees are holding back some potential EV buyers. With changes on the horizon for the electric vehicle tax credit, does this idea just slow down the inevitable?

High registration fees are slowing the adoption of electric vehicles

The Volkswagen ID.4 electric vehicle at the start of its production | David Hecker/AFP via Getty Images

A recent Consumer Reports study looked at potential new Texas law that would make electric vehicle registration more expensive. Texas lawmakers want to tax electric car drivers to compensate for reduced mileage on purchased gasoline and the taxes that come with gasoline.

A recent Consumer Reports analysis indicates that the proposed tax would add about $200 per year per electric vehicle. That’s about three times the amount a person would pay for gasoline and gasoline taxes per year. Talk about the slowing adoption of electric vehicles.

These flat annual fees do not take into account the time a driver may spend on the road. It’s another unnecessary burden for an electric car driver trying to reduce expenses. Since the fee has to be paid all at once, this may deter potential EV buyers from making the switch.

Why does Texas want to discourage the adoption of electric vehicles?

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Adding unnecessary fees like this only discourages people from switching to an electric vehicle. Consumer Reports says the key to getting more people to use electric vehicles and move away from gas-powered cars is to make the switch financially feasible. Adding additional fees and taxes to make a better choice for the environment is three steps backwards.

The federal tax credit aims to make electric cars more affordable. Adding a tax for not using gasoline does not help achieve this objective. Plus, who’s to say these people don’t pay gas and related gas taxes with a second vehicle?

But Texas is not alone in this idea. Taxes on fuels like gasoline and diesel are an important source of funding at the state and federal levels. Various states have changed the amount of the tax over the years, but the federal gasoline tax remains at 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel. That hasn’t changed since 1993.

State and local governments should find a new way to fund highway projects

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According to the Federal Energy Information Administration, the average fuel consumption of a vehicle is 25.3 mpg as of 2020. This has increased by five miles per gallon between 1993 and 2020. According to the US Bureau of Labor Statistics’ Consumer Price Index Inflation Calculator, the value of the dollar has halved since then.

“We need to get more creative about how to fund highway projects, but isolating electric vehicle owners with punitive taxes to cover revenue shortfalls like Texas wants to do won’t work.”

Harris Harto | RC Senior Policy Analyst for Transport and Energy

The decline of electric and hybrid vehicles only slows down the inevitable change. The higher price of electric vehicles has been enough of a hurdle for some to jump, why add another? States like Utah have added a voluntary program where drivers pay per mile using a state-provided mileage tracker. Colorado has passed new fees for delivery and ride-sharing services.

Texas adding flat fees for EV drivers will only discourage EV adoption. This is a temporary and detrimental solution to a long term problem.

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