Texas levies new $200 annual charge on electric vehicles

From 1 September 2023, fleets in Texas have faced new registration fees for electric vehicles.

Buyers of electric vehicles now have to pay a $400 first-time registration fee, to cover an initial two-year period, in addition to standard vehicle registration fees and any other taxes due on the vehicle.

This will be followed by a $200 annual registration renewal for electric vehicles. The standard fee for gasoline-fuelled cars and lighter pickup trucks is $50.75 per year. The new electric vehicle registration fees in Texas will not apply to plug-in hybrid vehicles, because these continue to use gasoline.

Revenue shortfalls

The new electric vehicle registration charges are designed to make up the shortfall in state revenue from lost gasoline taxes as drivers switch to battery-powered cars. The Texas Department of Motor Vehicles said the revenue collected from the fee will be deposited into the state highway fund to help pay for roadway construction and maintenance projects.

According to the U.S. Department of Energy’s Alternative Fuels Data Center: “Repairs and improvements to the nation’s highways traditionally have been funded primarily through federal and state taxes collected at the pump. Because EVs do not require gasoline, they do not contribute to the upkeep of highways through the gas tax.”

States impose similar taxes 

Texas is relatively late among states to introduce fees for plug-in hybrid or electric vehicles, with 32 states already having some form of charge in place, ranging from $50 to $225 annually. This revenue is typically directed towards state transportation funds, although some states, such as Alabama and Washington, are using it to subsidise electric vehicle infrastructure.

The Texas Department of Transportation says electric vehicle drivers save between $500-$1500 per year in refuelling costs compared to gasoline.

Last year 122,000 new electric vehicles were registered in Texas, and the numbers are rising rapidly. In October, the Texas Commission on Environmental Quality expects to start accepting applications for TERP (Texas Emissions Reduction Plan) grants to purchase or lease a new electric vehicle, in addition to the maximum $7,500 federal credit available through the Inflation Reduction Act.

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