Electric Vehicles: Are They Fueling the Economy or Hurting it?

In theory, electric vehicles (EV) sound great. They reduce the number of combustion engine vehicles on the road, which lowers emissions. And with the ever-growing concern about the nation’s carbon footprint, EVs seem like the right thing to do.

Overall, the market share of these vehicles is low, around 1.96% in the country for 2018, according to the Alliance of Auto Manufacturers.[1] However, their popularity is gaining momentum, particularly in states like California, Washington, Florida, Texas, and Massachusetts.

But are these vehicles really as great as their hype? And since they aren’t required to pay any federal or state fuel taxes, could a growing usage of these vehicles hurt our economy? Let’s take a look.

Why Electric Vehicles are Popular

EVs are popular for several reasons. They are easy to drive, can be recharged overnight, they help reduce emissions, and are cheaper to operate since they don’t require refueling with gasoline. Many politicians and climate activists tout these vehicles as the wave of the future. Some even go as far as suggesting that EVs replace gas-guzzling transportation altogether.

In 2018, EV sales were up by 81% in the U.S. compared to 2017. The Department of Energy says that EVs help us to have a greater diversity of fuel choices for transportation and reduce our dependence on petroleum. And while all of these are very valid reasons for promoting the use of EVs, the use of these vehicles also come with challenges – like taxes.

EV Drivers Don’t Pay Federal or State Fuel Taxes

While most drivers pay federal and state tax for the fuel they use to power their vehicles, EV drivers do not. This is significant because the money collected from these taxes goes to the government and is then distributed to cities to spend on highway and road maintenance. EV drivers use the same roads as other drivers, yet they do so for free.

Even natural gas, including renewable natural gas, which is a much cleaner burning fuel than gasoline, is taxed $0.183 by the federal government and $0.15 to $0.18 by the states. It offers the benefits of both reducing emissions and providing income to maintain the roads.

Right now, many states are struggling to fund highway maintenance projects as a result of lower revenue from fuel excise taxes.[2] This could worsen as more EVs hit the roads unless they are soon taxed.

So more EV drivers mean less money for road maintenance and repair. How long can this go on? Will electric vehicles eventually be charged for fueling?

In California, an annual registration fee passed for zero emission vehicles (ZEVs) as a way to help the state fund road maintenance. However, at the University of California in Davis’s Institute of Transportation Studies[3], researchers found that this alone would not be enough to support the long-run funding of the state’s transportation infrastructure.

The Electric Grid Can’t Handle the Stress of EVs

Electric vehicles may certainly be part of the solution, but switching entirely to EVs could create problems in the area of funding road maintenance as well as usage of the electrical grid. In fact, electric vehicles require heavy resources to manufacture, and they can take twice as much energy to build.[4]

During the month of October, in California, which is the most popular state for electrical vehicle usage, PG&E announced planned power shutdowns in Northern California. This shutdown would impact roughly 800,000 homes, including many drivers of electric vehicles. EV maker Tesla encouraged drivers to charge up quickly prior to this shutdown.

But if the grid in California is already overstressed with the existing amount of power usage, wouldn’t this onslaught of EV drivers charging their vehicles cause even more issues? Ironically, one driver said that he had a backup gas-powered generator he’d use to charge his electric vehicle.

For the rest of the drivers, what will happen to their vehicles during these reoccurring power shutdowns? And how will they evacuate if there isn’t enough juice for their vehicles? One study shows that in California, if the entire state moved to electric vehicles, it would require another 120 terawatt-hours of electricity per year, or 50 percent more than it currently consumes, pushing the demand over the state’s existing capacity.

Balance is Better

Balancing the use of EVs with other types of vehicles that rely on cleaner fuel provides drivers with more options, doesn’t overtax the electric grid, and provides the government with fuel tax revenue that it can put back into the transportation infrastructure.

Did you know that natural gas is the cleanest burning alternative fuel on the market today? For more information about this eco-friendly alternative to gasoline and diesel, visit American Natural Gas.com.


  [1] https://evadoption.com/ev-market-share/ev-market-share-state/

[2] https://www.avalara.com/us/en/learn/whitepapers/taxing-natural-gas-as-a-motor-fuel.html


[4] https://www.weforum.org/agenda/2017/11/battery-batteries-electric-cars-carbon-sustainable-power-energy/


About The Author Jennifer Lester is a freelance writer and social media strategist who covers topics related to energy and workforce. She has been writing professionally since 2015 and was a high school teacher prior to that. Jennifer is a graduate of Texas A&M University and a member of the American Writers and Artists Inc. Association. Her articles have been featured on Pink Petro and Experience Energy. She lives in Houston, TX and is the proud mom of three boys.

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