High Registration Fees Discourage Electric Vehicle Adoption

You may have noticed an uptick in electric vehicle adoption in your area. Consumer Reports says that number would be higher, but high registration fees hold some potential EV buyers back. With changes on the horizon for the electric vehicle tax credit, is this idea just slowing the inevitable?

High registration fees are slowing electric vehicle adoption

Taxes slow electric vehicle adoption
The Volkswagen ID.4 electric vehicle during the launch of its production | David Hecker/AFP via Getty Images

A recent study by Consumer Reports looked into the new potential law in Texas that would make registering an electric vehicle more expensive. Texas lawmakers want to tax electric car drivers to compensate for the reduced use of gas purchased and the taxes that go along with gas.

A recent analysis by Consumer Reports says that the proposed tax would add on around $200 a year per electric vehicle. That’s approximately three times the amount a person would pay for gas and taxes on gas per year. Talk about slowing electric vehicle adoption.

These flat annual fees don’t consider the amount of time a driver might spend on the road. This is another unnecessary burden for an electric car driver trying to lower expenses. Since the fee has to be paid at once, it may deter potential electric vehicle buyers from making the switch.

Why does Texas want to deter electric vehicle adoption?

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Adding on pointless fees such as this only discourages people from switching to an electric vehicle. Consumer Reports says that the key to getting more people into EVs and out of gasoline-powered cars is making the switch financially feasible. Adding on extra fees and taxes for making a better choice for the environment is three steps back.

The federal tax credit is meant to make electric cars more affordable. Adding a tax for not using gas does not help with that goal. Additionally, who is to say these people aren’t paying for gas and related gasoline taxes with a second vehicle?

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

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

According to the Federal Energy Information Administration, the average fuel economy of a vehicle is at 25.3 mpg as of 2020. That increased by five miles per gallon between 1993 and 2020. According to the U.S. Bureau of Labor Statistics’ Consumer Price Index inflation calculator, the dollar’s value has been cut in half since then.

“We need to get more creative on how to fund highway projects, but singling out EV owners with punitive taxes to cover shortfalls like Texas wants to do isn’t going to work.”

hris Harto | CR’s senior policy analyst for transportation and energy

Pushback on electric vehicles and hybrids is only slowing the inevitable switch. The higher price of EVs has been enough of a hurdle for some to jump through, why add another? States like Utah have added a voluntary program where drivers pay by mile using a mileage tracker provided by the state. Colorado has adopted new fees for delivery and rideshare services.

Texas adding a flat fee for electric vehicle drivers will only discourage electric vehicle adoption. This is a temporary and detrimental solution to a long-term problem.

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