NC bill would drive up costs for electric and hybrid vehicle ownership

Senate Bill 354 hopes to raise transportation revenue for the state. As more electric and hybrid vehicles hit the roads, fuel tax revenues are dropping and some say EV owners aren’t paying their fair share.
Published: Mar. 22, 2023 at 5:57 PM EDT
Email This Link
Share on Pinterest
Share on LinkedIn

RALIEGH, N.C. (WBTV) - Several North Carolina lawmakers want to increase the cost to own electric and hybrid vehicles in the state and have introduced a bill in the North Carolina Senate that would increase registration fees for some, and create new ones for others.

Iredell County Senator Vickie Sawyer is one of the primary sponsors of Senate Bill 354, a bill that looks to increase vehicle revenue in the state, but she wants drivers to know this isn’t an anti-electric vehicle bill.

“We’re just asking for parity for electric vehicle owners to pay pretty much what they would is if they didn’t have or if they had a gas, gasoline vehicle … this is not an attack on any one industry,” she said.

The argument for increased registration fees is explained in a presentation from the North Carolina Department of Transportation in 2020 and cites Governor Roy Cooper’s Executive Order 80 addressing climate change.

“Among other goals, because North Carolina’s transportation sector contributed 32 precent of the state’s total greenhouse gas emissions in 2017 the order seeks to increase the number of zero emission vehicles (ZEVs) to at least 80,000 by 2025,” according to the presentation.

Data from the US Department of Energy shows as of 2022 North Carolina had about 25,000 electric vehicles registered in the state. By comparison, South Carolina had fewer than 8,000 electric vehicles in 2022 while California had more than 1/2 million.

(Story continues below chart)

Decreasing fuel, decreasing revenues

The NCDOT acknowledges the benefits of electric and hybrid vehicles, but also say the cleaner cars come at a cost.

“Electric and hybrid vehicles present North Carolina and other states with a dilemma: how to maintain revenue equity for these vehicles (so all drivers pay their “fair share” toward the roads they use, even if they pay little or no motor fuel tax) while also encouraging their adoption for the sake of climate change, air quality, and other benefits,” according to the NCDOT.

North Carolina roads, bridges, railways, airports and more all rely on that tax.

“We pay for our transportation, 50% of that comes from gas tax revenue. I love EVs, I think they’re fun and cool … So, this isn’t a statement to say we don’t like electric vehicles. It’s a statement to say we have to be honest about how we’re going to fund our roads in the future,” Sawyer said.

(Story continues below chart)

Source: NCDOT

Reducing greenhouse gasses is a goal many cities, states, and countries agree is worth striving for. But, the appeal of these vehicles, reducing the need for gasoline, means fewer drivers are paying fuel taxes. Electric vehicle owners already pay a $140 fee to register in the state, hybrid owners do not pay any additional fees --- the bill would change that.

“At the time of an initial registration or registration renewal, the owner of a plug-in hybrid vehicle shall pay a fee in the amount of ninety dollars ($90.00) in addition to any other required registration fees,” the bill reads.

The NCDOT has faced financial troubles in the past several years and Sawyer said there is a major need for funding to keep roads and infrasturcture up to standards.

“There’s an estimated $8 billion underfunded program for our roads to be built, so it keeps me up at night --- when you have a decreasing gas tax revenue and increasing inflation, an $8 billion price tag for our roads that we just can’t meet,” she said.

The discrepancy of the cost fuel-consuming vehicles are paying compared to EV and hybrids means even though these vehicles are using the same roads, they’re not paying into the transportation fund as much as others.

“The estimated amount that a North Carolinian pays in a gas tax in a regular gas-powered vehicle is about $225 to $250 a year. When you have a fully electric vehicle, you’re not paying that amount of gas tax”

That difference and the revenue lost is only expected to go up.

“Exacerbating the difference, hybrid owners drive more miles annually than gasoline or EV owners. Assuming a 3% growth rate in the number of hybrid vehicles and increases in fuel efficiency, hybrid owners can expect to pay approximately $130 less per year than gasoline vehicle owners by 2030. This will lead to an annual revenue loss of $25-$28 million,” according to the DOT.

(Story continues below chart)


North Carolina is not alone --- more than half of the country also imposes fees for electric vehicles.

“28 states now have additional registration fees for electric vehicles. These fees range from $50 to $213 per year and several are indexed to inflation or otherwise structured to grow over time. At least 16 states also have fees for some or all hybrid vehicles,” according to the NCDOT.

While electric vehicles are still not as common as their fuel-burning counterparts the NCDOT and others point out the potential downfalls of increasing fees.

“At this early stage of EV adoption, for example, the proceeds make a minimal contribution to overall transportation funding—but having to pay an extra fee each year may discourage people from buying these vehicles and so may be at cross-purposes with policy goals to increase their use,” the NCDOT presentation states.

There’s also the fact that each driver has different habits can contribute to inequity.

“Flat fees are insensitive to vehicle miles traveled and therefore are less “fair” than fuel taxes in terms of reflecting actual road usage. As a result, motorists who drive less end up subsidizing those who drive a lot,” according to the presentation.

The bill is still in the General Assembly and was only introduced on Thursday so there are still several steps that lawmakers will need to take before it could become law.

Watch WBTV News and Weather Coverage 24/7: