Electric vehicle owners in Texas will be paying more to renew or register their vehicles starting in September.
Gov. Greg Abbott signed a bill 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, Senate Bill 505 was passed by the Texas Senate at the end of March, followed by the House in late April.
The new fee, which will take effect Sept 1, would not affect hybrid vehicles, who still pay gas taxes, nor would it affect owners of electric motorcycles, mopeds and autocycles, or a neighborhood electric vehicle with a maximum speed of 35 miles per hour.
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 based 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 2018.
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Austin is already an EV hub
The fee comes 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.
Comparatively, the Dallas-Fort Worth region has 69,996 registered electric vehicles, and Houston has 45,566 registered electric vehicles.
Tom “Smitty” Smith, executive director of the Texas Electric Transportation Resources Alliance, an advocacy group for adoption of electric vehicles, 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.”
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More than two dozen states pay similar 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 most states the fee only replaces lost state tax, but not federal. Texas’s fee is designed to make up for both state and federal gas taxes.
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 state 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 pace with rising costs of building and maintaining 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.
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.
Smith said the Texas Electric Transportation Resources Alliance 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.”