Alternative Fuel Vehicle Forecasts : Final report.

PDFTech ReportPRC 14-28FElectric vehiclesAlternate fuelsRevenuesFuel taxesbattery electric vehicle (BEV)alternative fuel vehicle (AFV)United StatesTexas A&M Transportation InstituteBaker, Richard T.Cochran, LaurenNorboge, NickMoran, MaaritWagner, JasonStorey, BeverlyTexas A&M Transportation InstituteNTL-ECONOMICS AND FINANCE-Economic ImpactsNTL-ENERGY AND ENVIRONMENT-Alternative FuelsNTL-HIGHWAY/ROAD TRANSPORTATION-HIGHWAY/ROAD TRANSPORTATIONNTL-LAWS AND REGULATIONS-State Laws and RegulationsUS Transportation CollectionFederal and state fuel taxes account for the largest share of the Texas State Highway Fund at 48 percent and 29 percent, respectively, in Fiscal Year 2015. These taxes are levied on a per-gallon basis, meaning that as vehicles get more fuel efficient, they return less and less revenue for every mile driven. This is problematic from a funding standpoint because passenger and commercial vehicles are expected to continue increasing in terms of their fuel efficiency. Furthermore, vehicles that operate on alternative fuels are becoming increasingly popular. The two most popular alternative fuels, ethanol and compressed natural gas (CNG), are both taxed by the state at per-gallon rates similar to gasoline and diesel taxes. However, ethanol and CNG vehicles tend to be more fuel efficient than their petroleum fuel-based counterparts. Furthermore, vehicles that operate on fuels that are not taxed for transportation-related purposes, such as electric vehicles (EVs), are being produced and sold at an increasing pace. Battery electric vehicles (BEVs), for example, essentially operate for free on Texas roadways after their sales, registration, and inspection fees have been paid. If BEVs and other alternatively fueled vehicles (vehicles not operating on gasoline or diesel) see widespread adoption by the motoring public in Texas, then revenues going to the State Highway Fund could be reduced in the long term. It is therefore important for Texas to be aware of trends in the alternative fuel vehicle (AFV) industry and their potential impact on fuel consumption and associated fuel tax revenue generation. Awareness will allow state policies to address any potential funding issues in the foreseeable future. This report provides a summary of recent trends in the development of alternative fuel technologies and factors impacting their adoption by the passenger vehicle and commercial vehicle fleets. Researchers relied on government, academic, and private-sector resources in compiling this report. This report also discusses the potential revenue impacts to the State of Texas with a specific focus on how alternative fuel technology adoption could affect long-term state fuel tax revenues. Finally, this report includes summary information and discussion on federal, state, and local incentives aimed at encouraging alternative vehicle technology development, deployment, and adoption