Opinion | Michigan EV drivers shouldn’t bear outsized cost to pay for roads

As Michigan policymakers debate ways to attract people to Michigan, they often bring up the need to adequately fund roads and bridges. The future of transportation, driven by the increasing electrification of vehicles and the importance of reducing carbon pollution, requires us to rethink the way we pay for our roads.  

The potential solutions, which begin to move Michigan away from a reliance on gas taxes and EV surcharge fees, should be explored carefully and tested in pilot projects throughout Michigan.

Gov. Gretchen Whitmer and Michigan’s Legislature are serious about growing EV adoption and economic opportunities in Michigan. This year, they adopted a 2024 budget that included $125 million for clean and electric school buses, $5 million for EV charging stations along Lake Michigan’s coastline, and $1 million to begin transitioning the state’s vehicle fleet to EVs. 

The MI Clean Cars 2030 campaign welcomes Whitmer’s goal of having 2 million electric vehicles on the road, by making electric vehicles the optimum choice for Michiganders and expanding access to EVs and EV charging infrastructure – especially for the most gasoline-burdened drivers. Our campaign also supports administration efforts to prepare Michigan’s workforce for the transition to 21st-century automobile manufacturing, helping to ensure the retention of good-paying auto jobs.  

Michigan can lead in this field. Michigan is No. 2, behind California, for hybrid and electric vehicle jobs, growing at twice the overall state job growth rate. More than 32,000 Michigan workers make hybrid cars, electric vehicles and batteries. Michigan is also expanding EV charging infrastructure with a goal of deploying 100,000 chargers by 2030, with help from the Infrastructure Investment and Jobs Act and other state and utility programs.  

Considering Michigan’s potential for continued economic prosperity in the EV sector, Michigan policymakers should embrace forward-looking road funding policies that are fair, pro-growth and meet our state’s needs as they weigh the impact of gas taxes on Michigan’s infrastructure budgets. In the process, they shouldn’t unfairly and disproportionately penalize EV drivers.  

Many Michiganders are not aware that most EV owners already pay more than they would for a similar gasoline vehicle since an EV surcharge (now set at $140/year) was established back in 2017. EV drivers also pay more in base registration fees since those fees are based on the purchase price (or MSRP) of the car, and EVs generally cost $5,000 to $10,000 more than a comparable gasoline vehicle. Research shows that owners of EVs in Michigan can pay as much as 40 to 60 percent more in transportation-related fees than owners of similar gasoline vehicles. 

Because EVs represent fewer than 1 percent of all vehicles on Michigan’s roads today, their impact on revenues will be minimal in the near-term. A bigger impact on revenues, however, will likely be the increased fuel economy of new gasoline vehicles driving on Michigan’s roads. 

A simple fix to this potential shortfall would be to index Michigan’s fuel tax to overall fuel use in the state, similar to how we index for inflation today. Total fuel purchases could then serve as a basis for ongoing adjustments to fuel and EV tax rates, and such adjustments would help to at least maintain needed revenues in the face of improving vehicle efficiency. 

As policymakers consider other mechanisms to increase the amount of revenue to maintain our roads, however, some foundational principles should be kept in mind. In addition to developing and implementing an approach that can sufficiently and sustainably fund needed infrastructure investments every year, Michigan also has the opportunity to promote greater fairness and equity. For example, those who use Michigan’s roads more than others by driving more miles or heavier vehicles should pay their fair share of the costs. At the same time, we should avoid penalizing those who buy cleaner, more efficient vehicles that generate less pollution. We should also seek to avoid unfairly penalizing households that can least afford higher costs.  

One option for road funding that many advocate is to charge fees based on a vehicle’s actual miles traveled. A pilot program could test small fees per mile and provide an annual tax credit to drivers for equivalent fuel taxes paid throughout the year, or a waiver of their EV surcharge. But keep in mind, mileage-based fees are only fair if they are adjusted for weight and the relative fuel economy of the vehicle. Otherwise, they tend to penalize owners of smaller, more fuel-efficient cars and trucks and EVs. Higher fees on more efficient vehicles would also tend to punish lower-income motorists hoping to save money when they trade in gas guzzlers for more efficient vehicles.  

If done right, mileage-based fees, with adjustments for weight and fuel efficiency, could be a fairer option for EV drivers who currently pay the same fee regardless of whether they drive 5,000 miles a year or 20,000. They also wouldn’t hit EV drivers all at once, tacked on top of annual registration fees. A pilot could give us better information as we consider mileage fees that would be fairer and more equitable for different types of drivers.   

Michigan policymakers have an opportunity to finally get road funding right, by balancing the need for sustainable funds with a fair and equitable approach that keeps us on the road to an exciting future of clean, job-creating electric transportation.