Benefits of Road User Charging for EVs

Date: Thursday March 9, 2023

The idea behind Road User Charging (RUC) is to charge road users on the distance they travel. The amount collected is then used for maintenance and repair of the road. In most current schemes, road users are charged a gas tax to fund road repair and maintenance. Since, the advent of Electric Vehicles (EVs), the use of gas is diminishing and revenue streams from the gas tax along with it. Resultantly, finances for road maintenance and repair are decreasing. Road user charging for EVs is a potential solution to this issue.

Why is this an urgent concern?

  • By 2030, if the US hits its target, EVs will make up more than 50% of vehicle sales – For each EV sold, the government (state and federal) will lose $3,000 in motor fuel tax revenues over the vehicle’s life.
  • Hitting its EV 2030 sales target implies that the government will lose over $20 billion in revenue in that one year.

Why road user charging for EVs?

  1. Electric vehicles weigh more and cause more wear and tear to the road. As EVs could be more detrimental to the road, pricing analysts believe that all EVs should be charged based on their distance and weight of travel. Several European counties, four U.S. states (New York, New Mexico, Oregon, Kentucky) and New Zealand already conduct RUC on heavy vehicles.
  2. Moreover, the cost to travel 1km is considerably less (4x) for EVs in comparison to conventional vehicles, EVs should also be charged RUC fees equally or more.
  3. EV users are already saving on subsidies, tax waivers and other benefits and RUC charges will not drastically impact the financial situation of EV owners.

What are the arguments against RUC as it relates to EVs?

  1. EVs are already paying taxes on electricity usage
  2. The purchase price of EVs is considerably high
  3. EVs contribute to society by having zero tailpipe emissions

Why distance-based measurement is good for EVs?

There is the idea that EVs could also be charged for the number of units of electricity they charge in EV batteries; essentially a fuel tax for electricity. However, there is ambiguity in this solution.

  • EVs are charged at home which will create confusion about which units (kWh of electricity) were used.
  • Separate meters will also be required at the depot for different EV fleets.
  • Moreover, there is fast charging (DCFC) which is expensive. All these require separate meters and could be problematic.
  • There could be different rates for commercial units in depots or public places which will create a cognitive burden on end users or fleet managers.

We understand that EVs should be charged for road usage like other vehicles as they cause the same (in some cases more) wear and tear as other vehicles. We also understand that RUC is straightforward in comparison to unit (kWh) based charging. Avoiding RUC on EVs could lead to a substantial loss of revenues as people will not be paying fuel taxes.

To learn more about road user charging for EVs, find our RUC USA Report on the topic.