Congress's proposed $130 EV fee equals the federal gas tax on about 707 gallons a year

At 18.4 cents a gallon, $130 is the federal tax on about 707 gallons of gasoline a year ^[14]. Gin's $75 average works out to roughly 408 gallons at the same rate ^[15]. So the bill would charge an EV as if it burned about 300 gallons more than the average gasoline car does ^[13]. Gin said "the proposed fee of $130 is much more than gasoline-powered cars pay" ^[8]. Ray Major, an economist who backs the bill, said "The proposed $130 offsets EVs' impact on infrastructure, which is by every measure a fair fee for owners to be paying" ^[2].

For an operator, the shape of the fee matters more than its level. David Ely of San Diego State University, who also supports the bill, said "The fee would not be aligned with miles driven or the per-gallon federal gas tax" ^[9]. A gasoline vehicle pays in proportion to the fuel it burns ^[4]. Under this bill an EV pays $130 whether it does a school run or a delivery route ^[3]. Any vehicle that would burn more than about 707 gallons a year pays less federal road money as an EV than its gasoline version pays at the pump ^[14]. For a fleet, the per-vehicle charge is fixed, so its cost per mile falls the harder each vehicle is driven ^[3].

The flat design comes out of what failed before. Per-mile road charges tried in San Diego and other parts of the country proved politically impossible, and the bill is seen as the alternative ^[18]. What Congress is not doing, then, is building the mileage-tracking system that would let the charge rise with use ^[18]. Gary London of London Group Realty Advisors, who opposes the bill and wants a miles-traveled charge applied equally to EVs and gasoline cars, said "It's not politically impossible" ^[19]. Ely said the bill "helps shrink the Highway Trust Fund structural deficit" ^[1]. The article does not give a revenue estimate, the size of that deficit, or a schedule for the fee after its first year.

The bill is a proposal and may not pass ^[3]. If it does, the fee "would start at $130 annually" ^[3], and an escalator could push it past what a high-mileage gasoline vehicle pays today. A per-mile charge of the kind London describes would undo the flat structure altogether, and with it the advantage to heavy users ^[19].

I think the fee is a small fixed line in a fleet budget, and the larger change to EV ownership costs has already happened. Caroline Freund of the University of California-San Diego School of Global Policy and Strategy said "The U.S. just removed the $7,500 credit and EV sales fell" ^[10]. That credit equals about 58 years of the proposed fee ^[16]. Freund's objection is about demand at the margin. EVs are 7% of new US car sales against 25% globally, she said, adding "An annual tax now would push the transition backward" ^[10]. James Hamilton of the University of California-San Diego said "If you want to discourage something, you tax it" ^[11]. My view is wrong if buyers at a 7% share react to $130 a year the way they reacted to losing $7,500 ^[16].