Yahoo Finance Owning a Tesla or Nissan Leaf in Texas is about to get more expensive under new EV tax
Electric vehicle owners in Texas will be paying more to renew or register their vehicles, starting in September.
Gov. Greg Abbott signed a legislative proposal into law Saturday requiring new electric vehicle owners to pay $400 to register their vehicles, in addition to other standard registration fees. Current owners would pay $200 a year when renewing registration. The proposal, SB 505, was passed by the Texas Senate at the end of March and the House in late April.
The new fee, which will take effect Sept. 1, would not impact those who own hybrid vehicles, who would still pay gas taxes. It also does not apply to owners of electric motorcycles, mopeds and autocycles, or neighborhood electric vehicles that have a maximum speed of 35 miles per hour.
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Lawmakers have sought ways to make up for the lack of gasoline tax payments by electric vehicle drivers, but attempts to pass similar measures in the past have been unsuccessful, including measures that would have been a flat fee, or fees depending on miles driven.
Gas taxes are the primary source of funding for road work in Texas. Currently, drivers of gas-fueled vehicles pay a 20-cent per gallon tax when they fill up at the pump. The gas tax regularly generates more than $3 billion annually, according to state records, including $3.7 billion in fiscal year 2018.
How many states have EV fees?
Texas is far from the first state to enact a fee for electric vehicles. The Texas Department of Motor Vehicles released a 'fair fee' study in December 2020, as part of previous legislative efforts, which showed that at the time nearly 30 other states already have special fees on electric vehicles to make up for a lack of gas tax income. On average, electric vehicle owners in these states paid $119.54.
In Texas, the report said the most straightforward and common approach used by most states that enacted an alternative fuel vehicle fee has been to add a fee to the vehicle registration. The report estimated that the equivalent gas tax amount would be about $100 a year for electric vehicles, and lower for a hybrid. However, it did note that an increased vehicle registration fee indexed to the cost of inflation would help keep the pace with rising costs of building and maintain Texas transportation infrastructure.
Several states including Alabama, Arkansas, Georgia, Michigan Ohio, West Virginia, and Wyoming pay a fee of $200 or more, and several more states including California charge $100 or more yearly.
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EV advocates say a mileage-based system would be preferred
Prior to the session, electric vehicle groups predicted an electric vehicle-specific registration fee would likely pass this year, despite previous failed attempts.
Tom "Smitty" Smith, executive director of the Texas Electric Transportation Resources Alliance, said the advocacy group is neutral on the fee's passage, but he would have preferred to see a mileage-based fee, which he views as a more equivalent system to what gas car drivers are paying.
“We would prefer our members get charged based on miles driven much like other drivers are,” Smith said. “The more you drive in Texas, the more you pay. Those people who drive less pay less than the average for the average driver that's calculated based on what you pay at the gas pump.”
Texas home to EV hub
The fee would come as electric vehicle industry experts say alternative fuel vehicles have started to reach a tipping point toward widespread public adoption, and as Central Texas becomes an increasing hub of electric vehicle activity.
Companies have increasingly set up shop in the Austin area in recent years, including Tesla, which now has its headquarters and a massive manufacturing facility in southeastern Travis County.
At the same time, electric vehicle ownership has been on the rise. While electric vehicles make up just 2% of overall registered vehicles in the Central Texas region, registration has jumped significantly in the past year, up from nearly 26,700 in May 2022 to nearly 39,000 this May.
The Austin area is considered particularly bullish on EV adoption and the region is home to 20% of all registered electric vehicles in Texas.
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Comparatively, the Dallas-Fort Worth region has 69,996 registered electric vehicles and Houston has 45,566 registered electric vehicles.
Smith of the Texas Electric Transportation Resources Alliance said Austin's affinity for electric vehicles is not surprising.
“We're a high-tech titan technology leader," Smith said. "You are likely to have a lot more early adapters and because Tesla's here, people see the enormous Texas Tesla plant and facilities out there are intrigued and do research and very quickly figure out that this is something they would want to purchase."
This article originally appeared on Austin American-Statesman: Texas' new EV tax boosts the cost to register an electric vehicle
