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How will we fund our roads? A case of decreasing revenue from electric vehicles

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  • Jenn, Alan
  • Azevedo, Inês Lima
  • Fischbeck, Paul

Abstract

Annual expenditures for transportation infrastructure have recently surpassed the funding available through tax and fee collection. One large source of revenue generation for transportation infrastructure is use fees that are charged through taxes on gasoline both on a federal and state level. A massive adoption of electric vehicles (EVs) in the United States would result in significantly lower gasoline consumption and thus reduce the revenue collected to maintain the U.S. transportation infrastructure. We investigate how different vehicles will change the annual fee collected on a marginal basis. In addition, we assess the effects of adoption of alternative vehicles on revenues using several projections of alternative vehicles adoption, both on a state-by-state basis and at the national level. We find that baseline midsize and compact vehicles such as the Toyota Camry and Honda Civic generate approximately $2500–$4000 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–$1300, while plug-in hybrid electric vehicles (PHEVs) such as the Chevrolet Volt generate $1500–$2700. 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. Total annual revenue generation decreases by about $200 million by 2025 as a result of EV adoption in our base case, but in projections with larger adoption of alternative vehicles could lead to revenue generation reductions as large as $900 million by 2025. Potential schemes that charge user fees on alternative fuel vehicles to overcome the decrease in revenue include a flat annual registration fee at 0.6% of the vehicle’s manufacturer suggested retail price (MSRP) or 2▪ per mile fee.

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  • Jenn, Alan & Azevedo, Inês Lima & Fischbeck, Paul, 2015. "How will we fund our roads? A case of decreasing revenue from electric vehicles," Transportation Research Part A: Policy and Practice, Elsevier, vol. 74(C), pages 136-147.
  • Handle: RePEc:eee:transa:v:74:y:2015:i:c:p:136-147
    DOI: 10.1016/j.tra.2015.02.004
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    References listed on IDEAS

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    1. Congressional Budget Office, 2010. "Public Spending on Transportation and Water Infrastructure," Reports 21902, Congressional Budget Office.
    2. Hensher, David A. & Puckett, Sean M., 2007. "Congestion and variable user charging as an effective travel demand management instrument," Transportation Research Part A: Policy and Practice, Elsevier, vol. 41(7), pages 615-626, August.
    3. Congressional Budget Office, 2010. "Public Spending on Transportation and Water Infrastructure," Reports 21902, Congressional Budget Office.
    4. Congressional Budget Office, 2010. "Public Spending on Transportation and Water Infrastructure," Reports 21902, Congressional Budget Office.
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    Cited by:

    1. Fetene, Gebeyehu M. & Hirte, Georg & Kaplan, Sigal & Prato, Carlo G. & Tscharaktschiew, Stefan, 2016. "The economics of workplace charging," Transportation Research Part B: Methodological, Elsevier, vol. 88(C), pages 93-118.
    2. Carling, Kenneth & Håkansson, Johan & Meng, Xiangli & Rudholm, Niklas, 2015. "The effects of taxing truck distance on CO2 emissions from transports in retailing," HUI Working Papers 111, HUI Research.
    3. Lu, Tianwei & Yao, Enjian & Jin, Fanglei & Yang, Yang, 2022. "Analysis of incentive policies for electric vehicle adoptions after the abolishment of purchase subsidy policy," Energy, Elsevier, vol. 239(PB).
    4. Gao, Yongling & Leng, Mingming & Zhang, Yaping & Liang, Liping, 2022. "Incentivizing the adoption of electric vehicles in city logistics: Pricing, driving range, and usage decisions under time window policies," International Journal of Production Economics, Elsevier, vol. 245(C).
    5. Kannan, Ramachandran & Hirschberg, Stefan, 2016. "Interplay between electricity and transport sectors – Integrating the Swiss car fleet and electricity system," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 514-531.
    6. Beheshtian, Arash & Richard Geddes, R. & Rouhani, Omid M. & Kockelman, Kara M. & Ockenfels, Axel & Cramton, Peter & Do, Wooseok, 2020. "Bringing the efficiency of electricity market mechanisms to multimodal mobility across congested transportation systems," Transportation Research Part A: Policy and Practice, Elsevier, vol. 131(C), pages 58-69.
    7. Chang, Sung-Eun & Woo, JongRoul, 2024. "Are electric vehicle users willing to pay tax for charging electric vehicles? A case study of South Korea," Energy Economics, Elsevier, vol. 129(C).
    8. Fonseca, Camila & Jiang, Haiyue & Zeerak, Raihana & Zhao, Jerry Zhirong, 2024. "Explaining the adoption of electric vehicle fees across the United States," Transport Policy, Elsevier, vol. 149(C), pages 139-149.
    9. Hayashida, Sherilyn & La Croix, Sumner & Coffman, Makena, 2021. "Understanding changes in electric vehicle policies in the U.S. states, 2010–2018," Transport Policy, Elsevier, vol. 103(C), pages 211-223.
    10. Duncan, Denvil & Li, Danyang & Graham, John D., 2020. "Tax rate design and support for mileage user-fees," Transport Policy, Elsevier, vol. 93(C), pages 17-26.
    11. Tscharaktschiew, Stefan, 2020. "Why are highway speed limits really justified? An equilibrium speed choice analysis," Transportation Research Part B: Methodological, Elsevier, vol. 138(C), pages 317-351.
    12. Carling, Kenneth & Håkansson, Johan & Meng, Xiangli & Rudholm, Niklas, 2017. "The effect on CO2 emissions of taxing truck distance in retail transports," Transportation Research Part A: Policy and Practice, Elsevier, vol. 97(C), pages 47-54.
    13. Gillingham, Kenneth & Jenn, Alan & Azevedo, Inês M.L., 2015. "Heterogeneity in the response to gasoline prices: Evidence from Pennsylvania and implications for the rebound effect," Energy Economics, Elsevier, vol. 52(S1), pages 41-52.
    14. Tianwei Lu & Enjian Yao & Fanglei Jin & Long Pan, 2020. "Alternative Incentive Policies against Purchase Subsidy Decrease for Battery Electric Vehicle (BEV) Adoption," Energies, MDPI, vol. 13(7), pages 1-19, April.

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