Traditionally, funding to maintain road and highway infrastructure comes from a gasoline tax, which means drivers of ICE vehicles contribute to the fund in proportion to how much they drive. However, the rise of EVs could cause receipts from gas taxes to dwindle.
California, the state with the highest level of EV adoption (and the most losses in gas tax revenue), currently addresses this issue with an annual $100 EV registration fee that goes towards maintaining roads. However, a new research report indicates that this approach is both unsustainable and inequitable.
“The registration fee is not a sustainable mechanism to provide adequate funding as California transitions towards ZEVs [zero emission vehicles],” states the report from the University of California, Davis’s Institute of Transportation Studies. “Additionally, the fee detracts from the market adoption of ZEV technologies by as much as a 20% decrease in new ZEV sales.”
The proposed solution? Instead of an annual EV fee, the report suggests implementing a road user charge, or RUC. In this model, drivers are charged a fee in proportion to how many miles they actually drive. In theory, the RUC could be applied to all vehicles. However, the report concludes that it would be most cost-effective to keep the gasoline tax for gas-powered vehicles, and impose the RUC only on EV drivers.
“Our analysis suggests that the best solution for creating a sustainable, robust funding system is an RUC program applied only to ZEVs (allowing the parallel gasoline tax to gradually atrophy and eventually disappear),” concludes the report.