On March 30th, the Tennessee General Assembly passed the Transportation Modernization Act which is a $3.3 billion package from Governor Bill Lee’s administration that will provide the state with innovative tools to address traffic congestion without raising the gas tax or taking on debt. However, the legislation raises registration fees for battery electric vehicles.
On average, Tennessee combustion engine vehicle owners pay approximately $274 (Source: University of Tennessee) in federal and state gas taxes each year, which goes to the state’s highway fund. These funds
are shared with local communities. Meanwhile, Electric Vehicle (EV) owners currently pay $100 into that fund, which is not currently shared with local governments. According to the new legislation, the registration fees for battery electric vehicles will increase from $100 to $200 between 2024 to 2026 and further increase to $274 by 2026.
The adoption of EVs and hybrids will continue to erode Tennessee’s primary revenue source for building and maintaining the state’s critical infrastructure, the gas tax. This comes at a time when the need for revenue to build and maintain roads is increasing at a rapid pace. There is an expectation of exponential growth in the EV/hybrid sector, with upwards of 200,000 EVs in Tennessee by 2028, which creates a challenge for TDOT’s ability to build and maintain transportation infrastructure. These vehicles cause just as much, if not more wear and tear to our roads as they weigh, on average, 800 pounds more than the average combustion engine vehicle (Source: EPA). To ensure the state can build and maintain roads, there must be parity between what the drivers of combustible engine vehicles and EVs are paying. The Transportation Modernization Act proposes sharing the EV fee with local governments just like the gas tax is shared.