America's roads and infrastructure are partially funded by gasoline taxes. So what happens when electric vehicles are adopted en masse? According to research out of Carnegie Melon University, a loss of nearly a billion dollars in tax revenue in less than a decade.
The latest dispatch from the Department Of Unintended Consequences comes from CMU's College of Engineering, which found that there could be a revenue loss of between $200 and $900 million by 2025 based on projected EV adoption rates.
From the paper:
We find that baseline midsize and compact vehicles such as the Toyota Camry and Honda Civic generate approximately $2,500-$4,000 in tax revenue over their lifetime. Under the current funding structure, battery-electric vehicles (BEVs) such as the Nissan Leaf generate substantially less at $400-$1,300, while plug-in hybrid electric vehicles (PHEVs) such as the Chevrolet Volt generate $1,500-$2,700.
While the lowest estimate in revenue loss is a drop in the bucket compared to total national revenue generation, gasoline taxes account for between 50 and 70 percent of the fees collected, depending on the state:
Even in states with high lifetime fees due to fuel taxes, such as California, revenue generation can be upwards of 50% lower than in states with high registration fees such as Colorado.
What's worse, the expenditures for infrastructure maintenance and upgrades has outstripped revenue generation in the last decade, making the possibility of losing any revenue streams a serious problem.
The research, led by Ph.D. student Alan Jenn, offers up some solutions to make up the difference, but they ain't pretty.
One idea is to charge a flat, annual registration fee of 0.6 percent of the car's original MSRP, which wouldn't affect people that can afford a new car, but would make owning and maintaining a used car prohibitively expensive.
Another proposed option is a road usage fee of 2 cents per mile, but the logistical challenges and expense of keeping tabs on odometers could be difficult to overcome. But that doesn't matter, because both have a snowball's chance of getting passed – let alone introduced – by any legislator that intends to run for reelection.
The third alternative is making up for the gas tax with an electricity tax targeted at EV owners of around 4.5 cents per kWh used, but that would run counter to the massive state and federal incentives being used to spur EV adoption through tax credits.
No matter what the solution, it's a problem we're going to have to get sorted quickly as EV adoption grows and our infrastructure continues to erode.