Electric Vehicles Could Short Governments $92 Billion in Taxes by 2030

Matt Posky
by Matt Posky
electric vehicles could short governments 92 billion in taxes by 2030

As governments across the globe push for the proliferation of electric vehicles, they’re creating a new problem for themselves. While EVs may be helpful in mitigating pollution in and around city centers, they’re not going to be nearly as friendly on the infrastructure.

A report from the International Energy Agency suggests the ramp-up of battery powered automobiles could result in a $92 billion tax shortfall by 2030, assuming everything goes according to plan. But even if global governments only manage to get halfway to their intended electrification goals, they’re still missing out on an estimated $47 billion in fuel duties.

That translates into the world needing somewhere between 4.8 and 2.6 million fewer barrels of gasoline and diesel per day, according to the Financial Times. Still, as impressive as that sounds, we’re nowhere near that mark just yet. Despite EVs having their best sales year on record in 2017, the vehicles themselves still only accounted for around 1 percent of the total market.

Automakers and enthusiastic governments hope to increase that figure to 30 percent by 2030. Some nations aim to phase out exclusively gas-powered vehicles entirely by 2040. While it remains to be seen if these ambitious goals are feasible, even approaching them will have unintended consequences.

Losing out on fuel taxes will be enough of a blow to governments that most will need to pursue other means of financing infrastructure projects in the coming years. “The major increase in the estimate of foregone revenues for the 2030 timeframe suggest that, for governments to retain sufficient income to invest in and maintain infrastructure, as well as to cover externalities from road transport, alternative taxation systems will be needed,” the the International Energy Agency said, suggesting road tolls and congestion charges as possible alternatives.

Other estimates are less forgiving. The center-right think tank Policy Exchange claims the United Kingdom alone could lose as much as $225 billion in fuel taxes between now and 2030.

There are all kinds of hidden dangers and benefits linked to EV adoption. Replacing oil-based propulsion with energy that could potentially be sourced from renewable resources is good for the environment. But some suggest widespread implementation of electric cars would do a number on most countries’ power grids, and battery construction has a higher environmental cost than one might think. The world is also butting up against a potential shortage on the materials necessary to facilitate expanded battery production, and EVs don’t address the simple fact that there are more miles being driven than ever before.

Even something as seemingly innocuous as online shopping has had a meaningful impact on the environment, as a multitude of delivery vehicles have been added to roadways to cope with deliveries. Meanwhile, people still undertake their daily commutes while ever greater numbers of cars, commercial trucks, ships, and airplanes roll out of factories. Electric or not, it all has to be powered somehow. Most new power plants don’t use renewable energy.

Those are disparate issues, though. Simply finding the money necessary to maintain roads will be a big enough challenge in itself — even if electric vehicles don’t end up being nearly as popular as predicted.

[Image: Electrify America]

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  • Tonyd Tonyd on May 31, 2018

    annual road use tax paid at registration renew. (curb weight X .05) X (miles driven / 15,000) X (30 / epa combined MPG). 3000 lb sedan 20,000 miles with 28 mpg = $215 - DD 6000 lb truck 7000 miles 19mpg = $206 - camper/boat 5000 lb suv 15,000 miles 15mpg = $467 - 100lb wifey shopping. If you don't want no goberment checking your miles driven it defaults to 25,000.

    • See 1 previous
    • TW5 TW5 on May 31, 2018

      I posted a similar formula not long ago, but I omitted curb weight, since it interferes with the mpg part of the equation. SUVs are double punished for weight and mpg, and hybrid fuel economy benefits are clawed back by the additional weight of batteries. Same with EVs. Keep in mind thought, that usage taxes have severe drawbacks. Is the tax revenue apportioned by state depending on where you drive? Gasoline tax does apportionment better.

  • HotPotato HotPotato on Jun 04, 2018

    ZOMG, whatever shall we do! Sheesh. You can charge per mile with a dongle in the OBD port. Or levy an annual registration surcharge on EVs. Or move toward congestion charges and toll roads, where the user pays. Or some combination of the above. All are being done in various places. None are hard.

  • Jeanbaptiste Any variant of “pizza” flavored combos. I only eat these on car trips and they are just my special gut wrenching treat.
  • Nrd515 Usually for me it's been Arby's for pretty much forever, except when the one near my house dosed me with food poisoning twice in about a year. Both times were horrible, but the second time was just so terrible it's up near the top of my medical horror stories, and I have a few of those. Obviously, I never went to that one again. I'm still pissed at Arby's for dropping Potato Cakes, and Culver's is truly better anyway. It will be Arby's fish for my "cheat day", when I eat what I want. No tartar sauce and no lettuce on mine, please. And if I get a fish and a French Dip & Swiss? Keep the Swiss, and the dip, too salty. Just the meat and the bread for me, thanks. The odds are about 25% that they will screw one or both of them up and I will have to drive through again to get replacement sandwiches. Culver's seems to get my order right many times in a row, but if I hurry and don't check my order, that's when it's screwed up and garbage to me. My best friend lives on Starbucks coffee. I don't understand coffee's appeal at all. Both my sister and I hate anything it's in. It's like green peppers, they ruin everything they touch. About the only things I hate more than coffee are most condiments, ranked from most hated to..who cares..[list=1][*]Tartar sauce. Just thinking about it makes me smell it in my head. A nod to Ranch here too. Disgusting. [/*][*]Mayo. JEEEEZUS! WTF?[/*][*]Ketchup. Sweet puke tasting sludge. On my fries? Salt. [/*][*]Mustard. Yikes. Brown, yellow, whatever, it's just awful.[/*][*]Pickles. Just ruin it from the pickle juice. No. [/*][*]Horsey, Secret, whatever sauce. Gross. [/*][*]American Cheese. American Sleeze. Any cheese, I don't want it.[/*][*]Shredded lettuce. I don't hate it, but it's warm and what's the point?[/*][*]Raw onion. Totally OK, but not something I really want. Grilled onions is a whole nother thing, I WANT those on a burger.[/*][*]Any of that "juice" that Subway and other sandwich places want to put on. NO, HELL NO! Actually, move this up to #5. [/*][/list=1]
  • SPPPP It seems like a really nice car that's just still trying to find its customer.
  • MRF 95 T-Bird I owned an 87 Thunderbird aka the second generation aero bird. It was a fine driving comfortable and very reliable car. Quite underrated compared to the GM G-body mid sized coupes since unlike them they had rack and pinion steering and struts on all four wheels plus fuel injection which GM was a bit late to the game on their mid and full sized cars. When I sold it I considered a Mark VII LSC which like many had its trouble prone air suspension deleted and replaced with coils and struts. Instead I went for a MN-12 Thunderbird.
  • SCE to AUX Somebody got the bill of material mixed up and never caught it.Maybe the stud was for a different version (like the 4xe) which might use a different fuel tank.