Starting in September, electric vehicle owners in Texas will face increased registration fees under a new law signed by Gov. Greg Abbott.
The bill, known as Senate Bill 505, requires new electric vehicle owners to pay $400 to register their vehicles, in addition to standard registration fees. Current owners will pay $200 annually when renewing their registration. The aim of the legislation is to compensate for the lack of gasoline tax payments from electric vehicle drivers. However, many advocates argue for a mileage-based fee as a fairer alternative.
The new law, set to take effect on September 1, will not impact hybrid vehicles, which still pay gas taxes, or owners of electric motorcycles, mopeds, autocycles, and low-speed neighborhood electric vehicles. The primary source of funding for road work in Texas is the gas tax, which currently amounts to 20 cents per gallon. State records show that the gas tax generates over $3 billion annually, with attempts to pass similar measures targeting electric vehicles in the past proving unsuccessful.
Electric vehicle advocates contend that a mileage-based fee would be a more equitable approach, aligning with what gas-powered car drivers pay. In addition, they argue that it reflects the principle of paying more for greater usage, similar to the way gas taxes are levied. However, the new legislation opts for increased registration fees instead.
The rise in electric vehicle ownership has been notable in Central Texas, particularly in the Austin area, which is home to 20% of all registered electric vehicles in the state. This region has witnessed an influx of electric vehicle companies, including Tesla, which established its headquarters and a large manufacturing facility in southeastern Travis County.
While electric vehicles currently account for only 2% of overall registered vehicles in Central Texas, the number has significantly increased, with registrations climbing from nearly 26,700 in May 2022 to nearly 39,000 in May of this year.
Texas is not the first state to implement fees specifically for electric vehicles. According to a study conducted by the Texas Department of Motor Vehicles, nearly 30 other states had already established similar fees by the end of 2020, with an average fee of $119.54. Most states only replace lost state taxes, not federal ones. In contrast, Texas aims to compensate for both state and federal gas taxes with its fee structure.
Some states, such as Alabama, Arkansas, Georgia, Michigan, Ohio, West Virginia, and Wyoming, impose $200 or more fees. Others, like California, charge $100 or more annually.
As the electric vehicle industry gains momentum, policymakers will continue to explore various approaches to funding road infrastructure in the face of changing transportation trends.