Electric Vehicles

Mich. proposal would result in higher fees for EVs

A proposal put forward by Gretchen Whitmer, Michigan’s Democratic governor, would increase fees imposed on owners of electric vehicles.

Whitmer has proposed increasing the state’s fuel tax by 45 cents per gallon to help fund the upkeep of Michigan roads. Michigan’s current fuel tax is 23.6 cents per gallon.

Under a 2015 law, increases in the state’s fuel tax trigger surcharges on electric and hybrid-electric vehicles. The law was an attempt to preserve highway funding sources by creating an offset to anticipated declines in fuel sales as more electric vehicles take to the road. The law also aimed to make sure electric vehicle owners pay their fair share for highway maintenance.

If Whitmer’s proposal moves forward, the annual surcharge on an all-electric vehicle could increase to $360, up from $130, and the surcharge on a plug-in hybrid vehicle could go to $150, up from $47.50. If enacted, the increase would make Michigan’s fuel tax the highest in the nation. A poll by the Marketing Resource Group found that 75% of Michigan residents oppose the proposed 45-cent gas tax hike.

Whitmer’s proposal would raise nearly $2.5 billion in funds to fix roads in Michigan. Fixing the state’s roads was one of Whitmer’s campaign pledges. She was elected in 2018.

While the electric vehicle surcharge aims to achieve equity among all drivers for the funding of roadways, electric vehicle advocates say the higher surcharge would act as a disincentive to purchasing an electric vehicle.

Michigan does not offer any statewide tax credits, rebates, or incentives for purchasing an electric vehicle. The state ranks 13th in electric vehicle ownership. Only 4,100 electric vehicles are registered in Michigan and only 0.59% of vehicles sold in the state in 2018 were electric. The national average is about 1%.

Even without rising levels of electric vehicle ownership, states across the nation are facing declining fuel tax revenues and, in reaction, are scrambling to find other sources to fund roadway maintenance.

A total of 20 states have enacted legislation requiring a special registration fee for hybrid and plug-in electric vehicles that is in addition to a standard motor vehicle registration fee, according to the National Conference of State Legislatures.