Analysis: Proposed federal gas tax boost could put a million EVs on US roads by 2050

The US federal fuel tax has not been increased in 25 years, and has thus lost nearly 40% of its value in inflation-adjusted terms. The trust fund that pays for highway maintenance is expected to run a $138-billion deficit by 2027 unless it can find new sources of revenue.

The US Chamber of Commerce has proposed phasing in a gas tax increase at $0.05 per year until it reaches $0.25 per gallon. If this comes to pass, it could be an impetus for increased EV sales. An analysis by consultancy Energy Innovation indicates that, under the Chamber of Commerce’s proposed scenario, annual EV sales would increase by about 100,000 units per year, adding 1.2 million EVs to US roads by 2050.

To evaluate the impacts of a gas tax increase, Energy Innovation ran a variety of simulations using the Energy Policy Simulator (EPS) computer model. The open-source and peer-reviewed EPS uses government data to assess the impacts of energy-related policies on emissions, costs and fuel consumption.

The study forecasts that the tax increase would create $39 billion in government revenue per year by 2022, and would reduce annual gasoline consumption by 30 to 35 million barrels. Energy Innovation also observed that a $0.25 gas tax would be equivalent to a $29 per ton carbon tax. As a general rule of thumb, each dollar of a carbon tax has about the same impact as a one-cent increase in gas prices.

 

Source: Energy Innovation

  • Brian Allman

    These are by far the lowest estimates that I have seen for EV’s on the road…”annual EV sales would increase by about 100,000 units per year, adding 1.2 million EVs to US roads by 2050.”

  • Lance Pickup

    I have to absolutely laugh at these ridiculous estimates of # of EVs sold and the impact. Clearly Energy Innovation doesn’t understand exponential growth and the fact that we are at the very beginning of a very fast growth curve.

    The headline should read: Less expensive EV’s will put millions of EVs on the road in 2025

    At the point where EVs become less expensive than ICE (on or around 2025), sales of EVs will take a hockey stick type behavior. By 2040 the only ICE I expect on the road will be those that have not yet been retired. All new cars by 2040 will all be EV. By 2050 the only ICE vehicles you will see on the road will be during 4th of July parades.

  • Ed

    Let’s keep the gas tax focused on infrastructure. Electrics will come as the industry shifts bases on emission demands.
    Just think if we had put a $0.10 tax on gas in 192 and raised it 5% per year.