Hybrids & Electrics

Some States Are Starting to Charge Fees for Electric Vehicle Owners

With many drivers choosing environmentally-friendly options, electric vehicles are seen on roads more and more. But some states are trying to cash in on the industry boom by charging owners fees for electric vehicles. What do these expenses go toward and will it hurt the growing EV market?

Why states are charging electric vehicle fees

Almost every state taxes gasoline to help pay for state transportation projects. But EV owners don’t get stuck with this tax because electric cars don’t need gasoline. With more electric vehicles on the road, some states want to ensure that all vehicle owners do their part to pay for the roads.

According to Consumer Reports, 26 states now impose some sort of electric vehicle fee. Out of those 26 states, 11 charge EV owners more than twice the amount paid by gas taxes, while three states charge even more than twice the amount.

Although only a little over half of the U.S. has already imposed EV fees, 12 other states are currently considering proposals to add EV fees to the legislature. So it seems the trend of EV fees will only continue to grow.

How much are electric vehicle fees?

Unlike a gas sales tax that’s paid each time you fill up, EV fees are paid yearly in most states. This annual fee is typically paid through your registration renewal, meaning most owners need to have a large chunk of money to pay for the fee upfront, instead of spending it on gas. 

The fees charged for electric vehicles are used to fund highway projects and support transportation infrastructure. Because most of this funding comes from taxes on gas, lawmakers are worried that with more people turning toward EVs, they won’t generate enough money to pay for it. Many states even claim that EV batteries make them heavier and worse for the roads.

States like Illinois have proposed fees as high as $1,000 per year. However, after many complaints, the state lowered the fee. Colorado and Wyoming charge $50 per year, while California currently charges $150, according to NBC News. Nebraska charges owners an annual fee of $75, North Carolina charges $130, Virginia charges $64, and fees go up to $300 in Georgia.

Will electric vehicle fees hinder sales?

Environmental consciousness and a minimalist lifestyle have led to a decrease in huge, gas-powered cars and an increase in hybrid and electric vehicles. Even though EVs currently account for around 1.8% of the market, according to CNBC, that number has grown steadily.

But as Consumer Reports explains, new electric vehicle fees may discourage future sales of the environmentally-friendly solution. While some choose EVs because of its minimal carbon footprint, others are drawn to the savings at the pump and incentives to live “greener.” With so many states demanding high fees, many electric car owners question whether these fees are a punishment for choosing a safer, more environmentally-friendly vehicle.

In fact, Consumer Reports estimates that, by 2025, around 18 states will charge EV owners fees that are more than the average tax paid for gas-powered vehicles. These expenses will only cover an estimated .04% of state highway funding. So if state-determined EV fees don’t make a dent in road repair, why are states making it more difficult to be an electric vehicle owner?