More than 30 states have adopted EV fees to replace lost gas taxes

Add Louisiana to the list of more than 30 states that have adopted electric vehicle fees.

Governor John Bel Edwards in June signed into law a bill that establishes a road-use fee of $110 a year for electric vehicles and $60 a year for hybrid vehicles. Hybrid or all-electric school buses are exempt.

The fees take effect on January 1, 2023. EV and hybrid owners will be expected to pay when they file their state income tax returns. Revenues are to be split 70–30 between the state fund that pays for road and bridge repair projects and local government transportation budgets.

Backers of the bill said it’s a matter of fairness: Drivers of carbon-powered vehicles in Louisiana pay an average of $148 a year in state gas taxes. Meanwhile, the state has $14.8 billion in deferred transportation maintenance projects and 13 bridges have been closed this year because they are considered  unsafe, causing disruption to commuters and businesses.   

Louisiana has fewer than 2,000 all-electric vehicles on the road, according to one recent report that looked at federal data. 

The move is not surprising. We’ve predicted that states would take this kind of action as more hybrid and all-electric vehicles come on our roads, each one reducing the amount of gas tax collected by federal, state, and local governments, and by special purpose districts.

Gas tax revenues are falling, but electric vehicles still put wear and tear on roads, so states need money to maintain them. Because of that, it’s just a matter of time until some sort of electric vehicle taxes or fees are enacted nationwide.

A study conducted for the Montana Legislature in the fall of 2021 found that 30 states, at that time, had established some kind of fee. The costs range from $50 in South Dakota to Michigan’s $235 for electric vehicles over 8,000 pounds. (Michigan raises its electric vehicle fees when gas taxes go up, so that rate is subject to annual recalculation.)

The study found that some states, like Louisiana, charge lower fees for hybrids. Others, such as Minnesota, specifically exclude hybrids from the electric vehicle fee. The majority of states assess the fees as part of the annual vehicle registration process. All states, so far, are dividing fee revenues between state highway budgets and funds that support county and city road projects.

Montana doesn’t yet have an electric vehicle fee, but a legislative committee is reviewing two separate proposals, one for an electric vehicle fee and one for a tax on electricity used to recharge cars at public charging stations. 

What does it all mean for gas station operators?

For the short term, it will be business as usual. According to a report from 2021, gasoline powered some 90% of the light-transport vehicles on the road. Historically, about 3% of U.S. light vehicles have been diesel-powered, although that percentage may have inched up in recent years.

And one U.S. government report estimates that in 2040, 78% of cars and light trucks will still be gas-powered.

But that is starting to change. Industry sources say 12.6% of all vehicles sold in the United States in the most recent quarter were “electrified” — meaning either full electric, hybrid, or plug-in hybrid. Tesla is still the runaway market leader, with a 66% share. However, Ford has doubled its EV sales in the past year, while Hyundai has quadrupled them.

High gasoline prices will only drive new interest in electric and hybrid vehicles. Detroit is responding with a new line of electric vehicles modeled on familiar family sedans and SUVs that promise 300-mile-per-charge range and performance similar to their carbon-powered counterparts.

Carbon-fuel retailers will need to start planning for a not-so-distant future, perhaps one where gasoline and high-speed electric-vehicle charging are just some of several services they offer. Some are looking to Norway where electric vehicles make up nearly 20% of the cars on the road in some areas.

Then again, in North Carolina, a proposed bill seeks to help gas stations compete by eliminating public electric-vehicle charging, unless the public agency operating the charging station also provides free gasoline at the same site.

As the industry pivots, sales of items other than gasoline will become more important to convenience store operators. Convenience stores already have some of the most-complex tax challenges of all retailers, which we covered in a blog post earlier this year.