U.S. Republican Senators have proposed a pair of bills to kill the country’s $7,500 electric vehicle tax credit and impose a new $1,000 tax on EVs to pay for road repairs. The Trump administration has made no secret of its displeasure with the existing framework, signaling at various points that the EV tax credit would go away.
Because EVs share the same road as gas powered cars, and EVs are not impacted by gas taxes, plus they weigh more than the average vehicle, feds are planning to make EV owners pay a fee.
Senator John Barrasso of Wyoming, joined by 14 senators including Senate Majority Leader John Thune introduced legislation to repeal the tax credit for new EVs and kill the $4,000 used EV credit, end the federal investment tax credit for EV charging stations and end credits for leased EVs. The credits would end 30 days after the bill was signed into law. The bill is dubbed the Eliminating Lavish Incentives to Electric (ELITE) Vehicles Act and introduced by Senator John Barrasso.
Senator Barrasso said this in a news release: “The hard-earned money of taxpaying Americans should not cover the cost of the luxuries of the nation’s elite. Nor should we be allowing China to infiltrate our markets and undermine our supply chain. Repealing these reckless tax credits from the Biden administration once and for all will stop Washington from giving handouts to our adversaries and high-income individuals. Wyoming families should not foot the bill for expensive electric cars they don’t want and can’t afford.”
The other piece of legislation that aims to increase the cost of EVs was proposed by Senator Deb Fischer of Nebraska. The Fair Sharing of Highways and Roads for Electric Vehicles Act, Fair SHARE for short would “ensure that electric vehicles pay into the Highway Trust Fund (HFT) to support the construction and maintenance of U.S. roads and bridges.”
The Tier 1 portion of the Fair SHARE Act proposes imposing a $1,000 one-time fee at the point of sale on all new electric vehicles. Since EVs are not subject to the gas tax, this outlay would help pay for the repair and maintenance of roads and bridges. It’s assumed electric vehicles do more damage to infrastructure because of their increased weight compared to combustion-powered cars and trucks. There’s also a Tier 2 to the Fair SHARE Act that targets heavy trucks. This would impose another one-time fee on each vehicle battery module that weighs more than 1,000 pounds. At $550, this charge would also be imposed at the point of sale.
The other bill would impose a one-time $1,000 fee charged at the time of purchase, which would be roughly equivalent to what drivers of conventional vehicles pay in federal gas taxes over 10 years for highway funds, said Senator Deb Fischer, the lead sponsor of the measure that also includes Senators Pete Ricketts and Cynthia Lummis.
“EVs can weigh up to three times as much as gas-powered cars, creating more wear and tear on our roads and bridges,” Fischer said, saying gasoline-vehicle users typically pay $87 to $100 annually to the trust fund.
Most revenue for federally funded road repairs is collected through diesel and gasoline taxes, which EVs do not pay. The Highway Trust Fund won’t have enough money to repair roads and bridges without each vehicle paying for the costs.
Transportation Secretary Sean Duffy said last month he thought EVs should pay for road use. “How to do that, I think, is a little more challenging.” As of this date there has only been state discussions of by the mile fees. Some states already charge electric cars and others charge all vehicles on tops of other fees.
Some states charge fees for electric vehicle owners to cover road repair costs. While Congress has opted not to hike fuel taxes to pay for rising road repair costs for over 30 years.
Since 2008, more than $275 billion – including $118 billion from the 2021 infrastructure law – has been shifted from the general fund to pay for road repairs.
The Trump administration has frozen funds to build EV chargers and is moving to rescind aggressive emissions rules that the Biden administration estimated would force automakers to build a rising numbers of EVs to comply.
EVs still face hurdles among consumers including that they are typically more expensive than equivalent gasoline-powered versions. If you’ve been shopping for a new EV, you might want to pick one up sooner than later as federal incentives are going away.
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