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Bill would force owners of electric cars to pay fee

January 29, 2011
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Out of central Indiana rolls electric-vehicle batteries made by EnerDel and Altairnano.

Remy International and Light Automotive make motors that turn the wheels.

And in Elkhart, Norwegian automaker Think assembles electric cars from the axles up.

billsEner1 Inc. CEO Charles Gassenheimer takes Vice President Joe Biden on a tour of the plant in Greenfield on Jan. 26. A proposed bill would subject electric cars to fee. (AP photo)

But some legislators are worried highway funding will become a victim of this success as Indiana makes strides toward being a player in the electric car sector.

After all, the roads these cars drive on are maintained partly by state and federal gasoline taxes assessed at the pump. If electric cars such as the Nissan Leaf, Think City or Chevrolet Volt begin selling in appreciable numbers, less money will flow to the state’s $648 million Motor Vehicle Highway Account.

In response, legislators have filed a bill that would charge electric car owners a $100 annual registration fee.

House Bill 1243 would apply to vehicles “primarily powered” by an electric motor, not to conventional gasoline-electric hybrids such as the Toyota Prius.

Plug-in electrics such as Think’s City and the recently launched Nissan Leaf would definitely be subject to the fee. Although the plug-in Chevrolet Volt has a gasoline engine, it, too, would appear to fit the definition of electric car.

“The term includes a motor vehicle equipped with a gasoline-powered motor that … is not capable of applying power to the motor vehicle’s drive wheels,” states the bill. The Volt, according to General Motors, has no direct mechanical connection between its extended-range gas engine and the drive wheels. The gas engine is used to generate electricity after the plug-in charge is exhausted.

“I think it’s just a matter of fairness,” prime sponsor William Friend, R-Macy, said of HB 1243’s aim to capture money that would no longer flow into the highway maintenance fund.

Friend said there likely are other ways to recoup lost money other than the proposed $100 flat fee. The federal government, concerned about a drop in gasoline tax revenue resulting from electric cars, has looked at things such as a so-called miles traveled tax—something already used in Europe.

Friend rejected that model. Effectively, he said, “you’d have Big Brother riding with you. I’d get some pushback on that one.”

bills boxThe proposed $100 annual fee is “arbitrary,” he said, adding that he’s open to other ways to determine what’s appropriate.

But Friend might not be far off. A conventional vehicle traveling 10,000 miles a year and averaging 25 miles a gallon burns about 400 gallons. Multiply that by the roughly 36 cents in state and federal gas taxes and that’s $144 in gas tax per year, figures Jesse Kharbanda, executive director of the Hoosier Environmental Council.

“Go with the $100 and shut up before someone does math,” a reader of AllCarsElectric.com told others commenting on a story about a similar, $100 registration fee proposed in Washington state.

Kharbanda agrees that something should be done to recover lost gasoline tax revenue with the rise of electric cars. Just what amount would be appropriate may require some study, he said, suggesting the state collaborate with other states looking at the problem.

Kharbanda added that he didn’t think a $100 annual fee would dissuade motorists from buying an electric car. Early adopters of any new technology expect to pay more for becoming pioneers, and $100 on top of $30,000 for an electric car isn’t likely to be viewed as a deal breaker, he said.

“I can’t see $100 being a serious disincentive.”

Nor does Walter Grassi, business manager at Smart Center Indianapolis, which eventually plans to sell a plug-in version of the diminutive Daimler AG Smart vehicle.

“You’re going to be paying taxes, period,” Grassi said.

A $100 flat fee is probably preferable to more intrusive schemes that could be used, such as GPS tracking of a car or a tax based on vehicle weight, Shannon Arvizu, a clean tech expert, wrote last year in an AllCarsElectric.com analysis of the proposed Washington state fee.

But she said plug-in electrics tend not to drive as far and aren’t as heavy as conventional vehicles and thus don’t put the same wear on highways.

Arvizu also said plug-in electrics could reduce a state’s health-care costs for treating respiratory illness linked to emissions from conventional petroleum-powered vehicles.

A Legislative Services Agency analysis of HB 1243 estimates the $100 electric vehicle registration fee could generate $900,000 in additional revenue annually to Indiana’s Motor Vehicle Highway Account.

The LSA said the Bureau of Motor Vehicles reports about 18,000 vehicles now registered as either a hybrid or all-electric vehicle. But the BMV couldn’t nail down just how many are powered primarily by electricity, said LSA, which assumed in its revenue estimate that 50 percent of these vehicles are purely electric.•

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