Impact of Lost Gas Tax Revenue Due to Sale of Electric Vehicles: Analysis and Recommendations for the 50 States

Although states might have policy reasons to encourage the use of Electric Vehicles (EVs), the impact of future U.S. EV sales present a significant loss of gas tax revenue for each of the states, as these vehicles do not require gas to operate. For the last three years the number of Electric Vehicle registrations have doubled and are steadily increasing as a result of people becoming more economically and ecologically minded. This is proving to be an optimal choice for car purchasers over standard Internal Combustion Engine (ICE) vehicles, as research has shown that Electric Vehicles are superior for exhibiting “faster acceleration, lower maintenance costs, zero tailpipe emissions, and much lower per-mile fueling cost” than cars that are gas operated (Romm, 2019). Additional factors to consider that initially stagnated the growth of Electric Vehicle sales, are the rising number of e-port charging stations and declining battery prices. The logistical influx of e-port charging stations in each state enables EV owners to charge their vehicles at their convenience and capitalize on financial incentives for re-charging at non-prime time designated hours throughout the week. Also, the reduction in average lithium-ion battery packs costs between the years of 2010 to 2018 dropped a remarkable 85% from $1,160 to $176 (Romm, 2019). This favorable trend is forecasted to continue to 2030 at an accelerated decline of “65%” where “average battery pack prices will reach $87/kWh in 2025” and then staircase downward again to “$62/kWh” (Romm, 2019)