At this week’s Frankfurt Motor Show, an array of new electric vehicles are making their debut, with a number of them set to reach U.S. shores in the coming months. By the end of 2020, industry analysts anticipate, there will be as many as two dozen long-range BEVs available in American showrooms.
Electric cars currently carry an often hefty price premium over comparable gas-powered models, a penalty that can be offset by federal and, where available, local incentives. But a new study finds that a growing number of states are actually penalizing EV buyers by socking them with added fees.
Ostensibly, these added charges — anywhere from $50 to $250, depending upon the state — are meant to offset lost revenue from gas taxes that help pay for state road maintenance and construction. But an analysis by Consumer Reports found that, in many states, the fees can substantially exceed what an owner of a conventional vehicle would be paying in fuel taxes.
“We realize we need to fund our roadways and our infrastructure,” said Josh Boone, executive director of Veloz, a California-based non-profit promoting EV adoption. But he cautioned that a “common sense approach” is necessary or those states risk putting up “a barrier…that could be devastating to the future of the electric car movement.”
For now, battery-electric vehicles, or BEVs, typically cost thousands of dollars more than comparable models using gasoline engines, though prices have begun to dip as battery prices come down. But most industry experts anticipate it will take at least until mid-decade before prices are on par.
Federal tax credits of up to $7,500, depending upon the vehicle, have helped offset that penalty, a factor analysts say has contributed to the surge in demand for products like the Tesla Model 3. But after hitting a critical sales threshold, the California carmaker’s incentives were cut to $3,750 last January, and halved again in July. They will vanish entirely at the start of 2020 and, as General Motors, Nissan and other manufacturers hit the sales threshold of 200,000 vehicles, they’ll see their federal incentives phased out, as well.
One advantage often highlighted by EV proponents, notably including Tesla CEO Elon Musk, is the fact that EVs are cheaper to operate because of the relatively low cost of electricity. At a national average of about 11 cents per kilowatt-hour, the Tesla Model S P100d sedan would cost just $11 to fully recharge a drained battery pack, working out to about 3.5 cents a mile over its 315 mile range. Even if it got a highly efficient 30 miles per gallon, a similar gas-powered car would cost $27.02 to full up, or 8.6 cents a mile.
Of course, the price of a gallon of gasoline includes state taxes — mostly for highway funds — averaging 49.62 cents a gallon, reports the American Petroleum Institute.
“Obviously, electric vehicles have no consumption that is taxable that makes its way to the Transportation Department,” Sen. Gary Romine, R-Mo., who was the main sponsor of the legislation, told Consumer Reports. “These fees would be a way for electric car owners to pay their fair share for maintaining the roads and bridges in the state. We’re not trying to penalize the electric car owner.”
But the CR study suggests the fees that states are adding may be anything but fair. It found that 26 states now impose additional fees for electric vehicles, and 11 charge more than what owners would contribute in gas taxes were they driving conventional vehicles. Three states actually sock EV owners with fees that are twice what they’d pay in terms of gas taxes.
Another 12 states are considering the addition of new EV fees, 10 are planning fees that CR contends would be “greater than what a driver on average would pay in gas taxes." Missouri’s proposed levy would start out at three times more than what the owner of a gas-powered vehicle would pay, rising to four times as much by 2025.
The fees vary widely. Colorado and Wyoming charge BEV owners $50 a year, California an added $100, and five states, including Ohio and Georgia, hit owners for $200 annually. Illinois is one of the latest states to create a special EV fee, an annual payment of $250. It originally was considering a figure of $1,000, but rolled that back in the face of a public outcry.
“People should be allowed to choose a vehicle that’s safe, reliable, and better for the environment — without being punished,” said Consumer Reports' manager of cars and energy policy, Shannon Baker-Branstetter.
But with more and more states struggling to balance their books and fund infrastructure programs, experts expect to see still more states tack on new EV fees.