A tax on electric vehicles? Surely not!

Georgia, my home state, recently passed HB170, the Transportation Funding Act of 2015. The bill, which was signed by Governor Nathan Deal in May, took effect on July 1, creating new sources of funding for road and bridge repairs. Georgia motorists are now paying a 26-cent-per-gallon excise tax at the pump.

Like most states, Georgia’s transportation infrastructure is a hot mess. Our roads and bridges are in need of immediate attention, and I initially applauded our elected officials for being uncharacteristically courageous, mentally preparing for higher fuel bills with a pretty positive attitude. I quickly became disillusioned, however, when I learned about one of the new sources of funding specified in the law.

Not only does the Act remove the state’s $5,000 tax credit for zero-emission vehicles, it creates a new annual alternative fuel vehicle fee for all vehicles that operate solely on electricity, as well as all plug-in hybrid electric or flex fuel vehicles registered with an alternative fuel vehicle license plate (allowing them to legally drive in Atlanta’s HOV lanes). When Georgia EV and (some) flex fuel owners go to renew their tags, they’ll be slapped with a $200 fee, in addition to any other tag fees or ad valorem taxes they owe.

Responding to my unhappy email on the matter, Representative Chuck Hufstetler wrote that while he didn’t vote for HB170 (he was absent that day), he could shed some light on the majority’s logic, explaining, “Since gasoline taxes are paying for the maintenance of our highways, alternative vehicle owners are not paying anything towards the maintenance of the roads. Therefore they felt that a fee equal to that should be assessed on these vehicles.”

Really?!

Because EV drivers aren’t paying their fair share at the pump, let’s slap them with a fine calculated on the assumption that they drive an average of 24,000 miles each year (more than double the national average), and let’s completely ignore the reason for the state’s EV tax credit when it was passed in 1998: metro Atlanta had been in violation of federal air quality standards for two decades. We needed people to buy these more expensive vehicles because we were looking up at a rapidly expanding hole in the ozone.

Now, after 17 years, with one of the most generous EV credits in the nation, metro Atlanta has the highest U.S. market share for plug-in vehicles … but not for long. A local Nissan dealer was quoted in the Atlanta Journal-Constitution, saying that he expected “a 70% decline in Leaf sales after the new law takes effect.”

So Georgia is choosing infrastructure over clean air … or is it?

Even with more EVs on the road, Atlanta still doesn’t meet the federal standards for ozone and fine particulate matter. And while traffic is definitely a leading culprit, natural weather conditions (it’s currently hotter than blazes here), geography (can you say sprawl?), industries and power plants also play a role.

And what powers GA’s EVs? Well, coal is still one of the primary sources of electricity generated in Georgia.

Because of this, the environmental impact of EVs has been receiving more scrutiny. A recent national study, published by a group of economists, compared gasoline tailpipe to electricity generation emissions at the county level, and found that gasoline cars likely cause less environmental harm than electric vehicles in many parts of the country. In fact, their subsidy map (below) shows that when all damages are considered, only 12 states warrant a subsidy rather than a tax.

A recent study concludes that only 12 states should offer EV subsidies.

A study by Stephen Holland, et al., concludes that EV subsidies are only warranted in 12 states.

That’s a shocking pronouncement. But enacting an EV tax in all of those states because of their current electric generation portfolio would be incredibly short-sighted.

Utilities like Duke and Consumers Energy are aggressively dismantling their coal-fired power plants, replacing them with (primarily) natural gas generation. And Georgia Power has been aggressively developing utility scale solar and has just launched a solar sales and installation service for its customers to encourage more distributed solar generation.

The map above reflects the status quo, but electricity generation is changing, and we shouldn’t let a short-term mentality (e.g., “we need more infrastructure funding”) create disincentives for electric vehicles (or other sustainable products or initiatives), which should be part of the long-term solution.

Study and map: Holland, S., Mansur, E., Muller, N., & Yates, A. (2015). Environmental benefits from driving electric vehicles? National Bureau of Economic Research. doi:10.3386/w21291

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July 15, 2015

About the Author

Lee Ann Head

Lee Ann Head

Lee Ann started Shelton Group's research department in 2000 and paved the way for us to become the insights-grounded creative agency we are today. After 17 years leading our research team, she recently moved to New Orleans, handing down the title of Vice President of Research & Insights, but remains an integral part of that team as she continues to oversee client projects and proprietary studies.

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Suzanne Shelton

President and CEO

Suzanne is the voice and the vision of Shelton Group. Drawing on her extensive experience in energy and the environment – and 25+ years in the marketing and advertising industry – Suzanne provides high-level strategic insights for our clients and guidance for our research and creative departments. She regularly speaks at conferences around the country, including Sustainable Brands, Fortune Brainstorm E and the International Builders’ Show, and serves as a guest columnist for publications like Fast Company, Green Builder and GreenBiz.com.

Susannah Enkema

VP Research & Insights

Susannah directs our research team and plays a key role in extracting the nuggets of information that pave the way for recommended marketing strategies and creative approaches. Susannah has nearly two decades of market research and strategy experience, including her role as president of SE Consulting, where she led the services for the likes of DIY Network and the makers of GORE-TEX®.

Laila Waggoner

VP Client Engagement

Laila leads our client engagement process, overseeing activities from both a strategic and a tactical level to ensure our work generates desired results – and clients’ satisfaction. She brings 25+ years of marketing leadership experience to her client relationships, with particular expertise in the homebuilding and remodeling industries as well as member-driven organizations, such as the Vinyl Siding Institute and Plastics Pipe Institute. Before joining Shelton Group, she led strategic marketing teams for Owens Corning’s insulation business.

Matt Brass

VP Creative

Matt steers the creative department in concepting, designing and producing campaigns. He ensures sound strategy and deep insights inform everything his team develops, and works closely with the accounts department to ensure copy and designs will meet our clients’ goals. As a designer and filmmaker himself, he’s also a principal contributor to all of Shelton’s in-house photography and videography work.

Glen L. Vesser III

VP Finance and Administration

Glen manages Shelton Group’s finances and administration, ensuring our internal systems run smoothly so we can provide exceptional client service in a seamless and timely manner. Glen’s financial and administrative expertise has been shaped by decades of experience in a variety of industries, including public accounting, media distribution and health care.

Mike Beamer

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Mike joined our team to help provide strategic vision and foster our agency’s growth by overseeing new business leads and managing agency marketing and website content. He arrived in Knoxville steeped in energy efficiency and renewables – he previously led client service for an agency division in Boston dedicated to marketing communications strategy and branding for B2B and B2C clients in that space.