“A decade ago it might have been true that policy changes abandoning [electric vehicles] EVs could have choked off the transition, but at this point technology advances have brought down battery costs so much that EVs already have competitive lifetime cost and range,” Jeremy Michalek, professor of engineering and public policy and co-director of the Vehicle Electrification Group at Carnegie Mellon University, said via email.
Provisions in the federal budget proposal passed by the U.S. House of Representatives and now under consideration by the U.S. Senate would eliminate the $7,500 tax credit for electric vehicle purchases, and charge EV owners an annual $250 fee to be paid into the Highway Trust Fund, which is generally funded by gas taxes. A number of states, like California, already charge EV owners an annual added registration fee.
The proposed addition of a $250 fee for EV owners — ostensibly to make up for their use of roadways without paying the gas tax — is more punitive than fair, experts said.
That fee “is way more than the typical conventional vehicle driver pays in gas taxes,” Alex Muresianu, senior policy analyst with the Tax Foundation, said.
“You have not balanced the relative prices of driving an EV and driving a conventional car. You have just flipped the scales in the opposite direction,” Muresianu said during a panel discussion Tuesday hosted by the Information Technology and Innovation Foundation (ITIF) on the issues surrounding declining gas tax revenues. The federal gas tax has not been raised since 1993, during the first Clinton administration, resulting in the underfunding of the Highway Trust Fund, which it supplies.
However, these actions, Michalek said, are not enough to significantly blunt the transition to electric vehicles — which, he added, have become more attractive alternatives to gasoline-powered vehicles than once was the case.
“We estimated that if technology trends continue and if every vehicle were to offer in both gasoline and electric versions, half of new U.S. car and SUV purchases could be electric by 2030, even without government incentives,” Michalek said.
That may be. But Congress — and the Trump administration — are not pausing in their efforts to blunt the adoption of EVs, taking aim at regulatory moves in states like California.
Following action by Congress, President Donald Trump signed legislation June 12 to end California’s move to phase out the sale of new gas-powered cars by 2035. The move also struck down the state’s ability to transition the heavy-trucking sector to zero-emission vehicles. The action has been roundly condemned by officials in California.
“Despite the President’s signature, this remains an unconstitutional, illegal, and foolish attempt to undermine California’s clean air protections,” California Air Resources Board Chair Liane Randolph said in a statement, as she welcomed legal action by California Attorney General Rob Bonta and the attorneys general of nine other states.
Since the adoption of the federal Clean Air Act, California has been granted a waiver by the U.S. Environmental Protection Agency to set its own air quality standards, in part because the state has had some of the most polluted air in the nation. For the first time, that prerogative was stripped by Washington.
California’s clean vehicle policies “have been central to the U.S. trajectory of vehicle emissions reduction and technology transition,” Michalek said, indicating federal EV tax credits and the Golden State’s own set of zero-emission policies contributed to the success of perhaps the most iconic electric car company in the nation — Tesla.
“Without California in the negotiations, it’s unlikely that the federal government would have tightened federal vehicle emissions and efficiency standards as much as they did under the Obama administration after decades of stagnation,” he said.
