MONTPELIER — A new report recommends that lawmakers hold off on instituting fees for electric vehicles until their market share improves.
Lawmakers tasked the Agency of Transportation with crafting recommendations for fees on electric vehicles as they look to deal with declining revenues from the gas tax. Vermont, like other states, has seen a drop in revenue as automakers create vehicles with better fuel efficiency. Gas tax revenue raised about $361 million in 2005 fiscal year, but just $312 million in the 2016 fiscal year.
The report authored by the Agency of Transportation recommends that lawmakers refrain from instituting fees on electric vehicles until they become a greater share of vehicles on the road. Just 10 states currently have levy a fee on electric vehicles. Instead, lawmakers should seek a viable revenue stream for the state’s transportation fund that accounts for better fuel efficiency in vehicles, according to the report.
The report makes similar recommendations to previous reports in 2012 and 2013.
Electric vehicles, including hybrids and plug-in vehicles, can help the state achieve the goals and strategies of the Vermont Comprehensive Energy Plan, and commitments laid out in statute to reduce greenhouse gas emissions. Those goals rely on vehicles in Vermont shifting from fossils fuels to renewably powered electricity, according to the report.
But gas-powered vehicles still dominant the market in Vermont and are the leading cause of pollutants.
“Transportation in Vermont today is almost wholly dependent on fossil fuels, is the largest source of air pollutants in Vermont, including air toxics, ozone precursors, carbon monoxide and contributes 46 (percent) of the state’s (greenhouse gas) emissions,” the report states.
If the state cannot implement a revenue solution that addresses declining gas tax revenue due to more efficient vehicles, lawmakers should consider an electric vehicle fee should go into effect when the number of electric vehicles reaches 15 percent of auto sales, about 18,835 new registered vehicles, according to the report. That is expected to happen by 2025.
“To increase the fees now is at cross purposes with the state’s efforts to incentivize EV purchase and use, and increase the number of EVs on Vermont’s roadways,” the report states. “Transitioning from conventional gasoline-powered to electric vehicles is essential for meeting the state’s short and long term climate and energy goals, and will also reduce the public health problems caused by air pollution, keep many more dollars in the Vermont economy, and reduce the costs of transportation for businesses and households.”
If lawmakers choose to implement such a fee when electric vehicles hit 15 percent market share, the report recommends that state agencies implement a fee at the beginning of the next fiscal year.
“The fee amounts should be reasonable and reflect factors such as estimated lost gas tax revenues due to factors such as battery technology and estimated average vehicle use at the time the fee is put in place,” the report states.
According to the report, there were 1,395 registered electric vehicles in Vermont as of October. That represents just 0.3 percent of the 450,000 passenger vehicles registered in the state. Quarterly registrations vary, but the report states that since 2009 the average electric vehicle registrations in the state has been about 1.9 percent of all registrations.
“This indicates that the EV market in Vermont, and in fact in all other states as well, is in a very early phase,” the report states.
The report found that the growth of electric vehicles will depend on automakers’ ability to offer models suitable for Vermont, the cost of the vehicles, charging station infrastructure, government regulations and incentives offered by the government of other parties. Forecasting future growth is difficult because of those factors.
Still, the report offers three potential levels of growth. In the low growth scenario, the state could see 40 percent, or 180,000 electric vehicles by 2050. The mid-level scenario projects 60 percent of the state’s registered vehicles to be electric, or about 270,000 cars. The high-level scenario projects 90 percent market share, or 405,000 electric vehicles.
“Under these scenarios EVs are predicted to reach 10% of the new light duty vehicle market between 2022 and 2025. The scenarios reflect continued growth in sales through 2035 before beginning to taper,” the report states.