Electric vehicle (EV) drivers in Texas will be unable to avoid paying gas taxes, according to a new state law.
Generally, drivers pay for road usage through gas taxes, which are allocated to state road maintenance and repairs. However, since EV drivers do not need to refuel, they do not pay this tax. Texas politicians are taking action to address this.
Senate Bill 505 passed earlier this year. Under its provisions, EV drivers in the state will need to pay a $200 registration fee for their plug-in vehicles starting in September. This could be double the amount paid by conventional vehicle drivers at the gas station.
For those purchasing a new EV, an upfront fee of $400 is required. These fees will mean that Texas will have some of the highest EV registration fees in the United States.
In comparison, Texas has one of the lowest gas tax rates in the United States at $0.20 per gallon, which is below the national average of $0.29. These higher EV registration fees aim to create a level playing field.
States argue they are losing revenue as more drivers switch to electric, even though EV adoption in the US was only at around 6% by the end of 2022.
This trend is mainly observed in conservative states. For instance, Arkansas, a historically Republican state, has a relatively low gas tax of $0.25, and their registration fee for EVs is also $200.
On the other hand, California, which leans more Democratic, has the highest concentration of EVs in the US, accounting for 21% of new car sales. Even with a much higher gas tax of $0.58, annual EV registration fees are $175 or less.
Many experts in the industry argue that high EV registration fees serve as a barrier to widespread EV adoption. The cost of these vehicles already concerns potential buyers, as does the expense of charging them compared to fueling a gasoline-powered car. Additional unexpected registration fees further impede the transition to electric vehicles.
A slower rate of adoption poses a significant threat to automakers investing billions of dollars in EVs and domestic battery and EV factories in the US.
However, even as Texas soaks EV drivers with high registration fees, EV prices are starting to decline. In addition, numerous estimates suggest that the cost of electricity for EVs is still cheaper than gasoline.