Project 1:
Implications of Electric Vehicle Penetration on State and Federal Highway Revenues

Objective

Research and evaluate the impact that increased use of electric vehicles will have on federal and state highway revenue sources. This work will identify existing laws and policies that govern highway, gas, and vehicle taxes and fees imposed on vehicles and summarize current trends and policy recommendations that may both influence the growth of the electric vehicle market and impact highway revenues.

Brief Description

Gasoline taxes account for $31.1 billion or about 87% of the Federal Highway Trust Fund (HTF). This project examined the impact of present and future electric vehicles sales on the HTF. A report, Implications of Electric Vehicles on Gasoline Tax Revenues, presents the project results which shows that the market penetration of electric vehicle (EV) sales has been increasing, but EVs have resulted in very little impact on gas tax revenues. As of August 2015, the lost gas tax revenue from EV sales of 365,000 vehicles is shown to be $71.5 million or a percentage loss of 0.23%. The report also examines the implications and needs in HTF funding. According to numerous references, the HTF has experienced a continuing shortfall that is attributed to three major factors; more fuel efficient internal combustion engine (ICE) vehicles, increasing inflation and the fact that federal gas rates has not risen since 1993 and the increased cost in highway construction and repairs. In December 2015, the Congress passed and the President signed a $300 billion, five year, transportation bill that funds the nation's highways and other infrastructure. This long-term bill is called the FAST Act (Fixing America's Surface Transportation). The report completes this project effort.

Research Results

The research report, referenced below, summarizes the project results to determine if current and near future EV sales will have an impact on gasoline (gas) tax revenues as part of the Federal Highway Trust Fund (HTF). The project results were accomplished through a review of existing industry and government reports that detail fuel tax revenues and through analysis of EV sales from 2010 to 2015.

Results for electric vehicle (EV) market penetration have shown increasing sales, but EVs have resulted in very little impact on gas tax revenues. As of August 2015, the lost gas tax revenue from EV sales of 365,000 vehicles is shown to be $71.5 million or a percentage loss of 0.23%. Current assessment is that in 15 to 25 years EVs could make an impact on revenue. Policies and programs that aim to increase revenue streams for highway funding as a result of EVs are under discussion in some states. Options being considered are fee based travel, increased direct taxes and surcharges on vehicle purchases.

The report also examines the implications and needs in HTF funding. The HTF has experienced a continuing shortfall that is attributed to three major factors; more fuel efficient internal combustion engine (ICE) vehicles, increasing inflation and the fact that federal gas rates has not risen since 1993 and the increased cost in highway construction and repairs.

In December 2015, the Congress passed and the President signed a $300 billion, five year, transportation bill that will fund the nation's highways and other infrastructure. This long-term bill is called the FAST Act (Fixing America's Surface Transportation). The legislature does not raise the gas tax of $0.184/gallon, but relies on short-term financing measures. The Congressional action will temporarily fix the federal part of the Trust Fund, but the long-term stability of the federal funding is still not completely addressed.

For the future, if the gas tax is to remain the major source of highway funding, then both federal and state level policy officials most likely will need to create and implement transportation revenue generation strategies that may not rely entirely on the gasoline tax. The report covers some of the revenue generation options in place and under consideration as well as the pros and cons of each. This project is considered completed with the publication of the research report.

Impacts/Benefits

Results of the study suggest that EVs currently and for the near future have very little if any impact on gas tax revenues. EVs have not yet made an impact into the market to be a key player in gas tax or the shortage of highway funding. However, there are a number of states that are investigating and/or implementing revenue generating alternatives in order to not only increase funding for highway improvements but also prepare for an increase in EV market penetration.

Reports

Schleith, K. (2015) Implications of Electric Vehicles on Gasoline Tax Revenues (FSEC Rep No. FSEC-CR-2011-15). Cocoa, FL: Florida Solar Energy Center.

Schleith, K. (2017) Implications of Electric Vehicle Penetration on State and Federal Highway Revenues (FSEC Rep No. FSEC-CR-2052-17). Cocoa, FL: Florida Solar Energy Center