How Should EV Owners Pay for Use of the Roads?

Drivers who make the switch to an electric vehicle from a
gasoline-powered car stand to save big on fuel spending. Roads,
meanwhile, lose out on a revenue generating opportunity.

The rise of EVs has prompted an important question for U.S.
policymakers: How should EV owners pay for use of the roads if they
aren’t contributing via the gas tax?

Nearly two years ago, then-California Governor Jerry Brown

signed a road-funding bill
, SB 1, that included a $100
annual registration fee for zero-emission vehicles. By the end of
2018,
21 states
had adopted similar registration fees on electric
vehicles in an effort to replace lost fuel taxes paid at the
pump.

In the most recent example, Iowa transportation officials

recommended state lawmakers establish
a $130 annual
registration fee for all-electric vehicles and a $65 annual fee for
plug-in hybrid electric vehicles, beginning in 2020.

The California ZEV registration fee, which takes effect on July
1, 2020, was always viewed as an interim measure. Prior to the
passage of SB 1, California had already launched pilots to test the
viability of mileage-based alternatives
to pump-based fuel taxes for the millions of gasoline cars already
operating in the Golden State. It was assumed that if such a
per-mile system were implemented statewide, EVs would be included
as well.

A
report
released earlier this month by the Institute of
Transportation Studies at the University of California, Davis (UC
Davis ITS), requested by the California State Legislature, provides
policymakers with recommendations on the optimal ways to collect
road user fees.

For now, the report urges the adoption of a two-track system:
owners of gasoline and diesel vehicles continue to pay fuel taxes
at the pump, while owners of electric vehicles pay a mileage-based
road user charge (RUC).

“The report strongly recommends consideration of alternative
ways to fund road infrastructure,” said Alan Jenn, research
scientist at the UC Davis ITS’ Plug-in Hybrid & Electric
Vehicle Research Center and author of the report.

“The one we land on in the report as the most sustainable, and
provides some interesting potential options in the future,” he
said, “is the use of a road user charge for electric vehicles
that is a per-mile fee.”

EV registration fees not a sustainable solution

In terms of funding for infrastructure, the annual ZEV
registration fee included in SB 1 “doesn’t quite make sense,”
said Jenn. “It’s significantly lower than what the average
Californian pays in terms of the gas tax every year.”

“As we think about this longer-term transition towards a much
higher volume of electric vehicles, the sustainability of the
revenue for infrastructure funding is going to decrease,” he added.
“From the goal of repairing the road infrastructure funding, it
doesn’t do a good job.”

Jenn’s research also indicated that the registration fee could
slow EV adoption. UC Davis ITS researchers surveyed several
thousand EV owners in California about how their purchasing
decisions might have been affected had a registration fee been in
place when they bought their plug-in vehicles.

The responses, combined with a separate econometric analysis of
EV sales in states that have adopted registration fees, showed a
decline in future EV sales could be expected.

“Both of those show that there is an impact of a decreasing
adoption of anywhere between 10 and 20 percent in the short run,”
said Jenn.

There is also the issue of fairness. A flat registration fee,
detached from driving activity, would create two unequal
systems.

“Someone who could be driving 20,000 miles versus 10,000 miles
would be paying twice as much with the gas tax but would be paying
exactly the same with the registration fee,” Jenn noted.

The two-track system

Jenn settled on the two-track system — the status quo for
gasoline cars, a mileage-based fee for EVs — in recognizing the
administrative and technological challenges involved with
transitioning to a per-mile fee for California’s large existing
fleet of gasoline cars.

He observed that in Oregon, where volunteers can opt into the
OReGO program, drivers
pay a 1.7-cent per mile road user charge but still pay fuel taxes
when they fill up at the pump. A crediting system then trues up the
difference between what is paid at the pump and the mileage-based
fee logged by the vehicle.

“From a practical standpoint,” Jenn said, “it might be a
lot easier to implement a RUC for a smaller of subset of vehicles,
such as electric vehicles.”

That’s not to say it’s inconceivable that gasoline and
diesel vehicles could eventually shift to a mileage-based
system.

New vehicles, gasoline or battery electric, come equipped with
advanced computing technology, including telematics systems. Many
existing gasoline cars would have to be outfitted with devices to
track mileage for taxation purposes, as is the case in Oregon.
Compatibility issues could lead to higher costs if not managed,
said Jenn.

If automakers can “figure out how to standardize all of the
requirements through the telematic system of the vehicle for EVs
first, then that could conceivably be extended to internal
combustion engines in the future,” he said.

Too early for EV road user fees?

But is it too soon to push for EV owners to “pay their fair
share” for road use today? U.S. EV sales
increased by 81 percent
 to 361,307 in 2018, but it’s still a
nascent market, especially outside California.

“If we really want to see EVs replace ICE [internal combustion
engine], then not making them pay road use fees is one kind of
fairly painless incentive that can be offered,” Chris Nelder, a
manager with Rocky Mountain Institute’s mobility practice, wrote
in an email.

He added: “Making them pay the same as ICE essentially says
both are equally valid from the perspective of social priorities,
ignoring the externalities,” such as fossil fuel consumption and
planet-warming pollution.

Source: FS – Transport 2
How Should EV Owners Pay for Use of the Roads?



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