Fuel for thought: How will electric vehicle users pay for road maintenance?

Should EVs pay more for road upkeep?

A poll of EV users in the US has found nearly half of respondents support a per-mile fee to pay for road maintenance. Fuel excise is technically designed to maintain roads. Are EV owners dodging their share of road upkeep? Will we have to introduce electric vehicle road fees?

The poll comes as the state of Illinois legislature proposes a steep registration fee of US$1,000 on new electric vehicles. The fee would ensure drivers of EVs pay their fair share of the state’s road maintenance. By contrast, the annual registration in Illinois for a petrol-driven car amounts to US$148.

At issue is the problem of who pays for the upkeep of the nation’s road infrastructure. And as more drivers choose electric over internal combustion engines, are EVs getting a free ride?

How we pay for our roads

Road construction - who will pay the EV share?

Road construction – who will pay the EV share?

In Australia, the Federal Government is responsible for funding the national road network. Along with vehicle registration fees, it collects around 41 cents per litre in tax from fuels sold at the pump in Australia.

In addition, revenue from tolls, GST and insurance premiums also flow into government coffers. In total, fuel, registration, and associated vehicle charges raise almost $13 billion per year.

Although this money is not all used for funding roads – it winds up in the Commonwealth Consolidated Revenue Fund – it’s how the government pays for road upkeep.

However, there are growing concerns that this approach to road funding is becoming unsustainable. The uptake of EVs and fuel-efficient vehicle is driving a rapid decline in fuel excise revenue.

The 2018-19 financial year will reportedly see between 8,000 and 12,000 full plug-in EVs sold in Australia. An EV owner using home solar power to charge their vehicle overnight pays no fuel tax. Thus, apart from a luxury car tax and import duty, they pay less to use the roads.

This risks creating a two-tiered system of road funding, leaving petrol and diesel guzzlers to carry the load. So should we levy electric vehicle road fees to pay the fair share for EV users?

Finding an equitable solution to road funding

In 2016, Infrastructure Australia called for fuel excises and vehicle registrations to be scrapped for all motorists in favour of a ‘direct charging’ approach to roads funding. It proposed tracking drivers using GPS or E-tag devices and charging a fee per kilometre driven.

The proposal never gained traction. But the model has since been championed for EV users.

It would essentially involve the EV sending an odometer reading at the end of each month or quarter to a relevant authority for billing.

Electric vehicle road fees based on usage

These electric vehicle road fees based on usage  would avoid the potential disincentive to purchase EVs that raising registration fees might bring.

Like the rest of the world, Australia needs to plan ahead for the influx of electric cars. Considering the low impact of EVs so far in Australia, now is a good time to start planning for the future.