Main Street Nashville
NASHVILLE WEATHER

TDOT pitches $200 fee increase for electric vehicles to raise funds for road projects





Tennessee’s Department of Transportation is asking the legislature to approve a $200 increase in annual registration fees for drivers of electric vehicles to help raise revenue for road projects as the state faces $26 billion in unfunded road projects to address congestion.

Tennessee funds highway maintenance with the gas tax: 26 cents per gallon for gasoline and 27 cents per gallon for diesel fuel.

As Tennessee’s population has grown, gas tax revenue is no longer keeping pace with increasing congestion and new road needs. Gov. Bill Lee has said he will not raise the gas tax rate, and opposes taking on any debt to build new roads. So, TDOT Commissioner Butch Eley is looking for other ways to increase funds available for needed road improvements.

Now, the administration is saying it’s time for electric vehicle drivers to pay their fair share.

Combustion engine drivers’ tax burden depends on the individual user: drivers choose the fuel efficiency of the cars they choose to drive, the miles they drive and the gas they purchase. Based on miles driven and gas purchased by Tennessee drivers, TDOT estimates that combustion engine drivers pay an average of $300 in gas tax to the state each year.

Meanwhile, electric vehicle owners pay much less: a flat $100 registration fee each year.

Electric cars are projected to make up 3% of all vehicles driven in the state by 2028. By that time, TDOT estimates the state will lose about $40 million per year in gas tax revenue.

In order to recoup that loss and “create parity between combustion engine drivers and electric vehicle drivers,” TDOT is asking the legislature to approve a $200 per year increase to annual EV registration fees.

Eley told reporters at the State Capitol on Wednesday that he doesn’t see the higher fee as a disincentive to drive an electric car.

“Electric vehicles from an engineering perspective often weigh more,” TDOT Chief Engineer Will Reid agreed. “One could make the case that they are putting more wear and tear on our pavements than in a conventional combustion engine vehicle.”

The state has paid more than $100 million in economic incentives to electric vehicle manufacturers opening or expanding operations in Tennessee since January 2021. Owners of those electric vehicles will pay more for the privilege of driving on state roads.

Leave a Reply