Al Root

The latest version of President Donald Trump's tax and spending bill includes another hit to the electric vehicle industry.

The legislation includes a provision for the Federal Highway Administration to impose a $250 annual fee on all-electric vehicles and a $100 yearly fee for hybrid vehicles.

The FHA helps build and maintain roads -- and gets most of its money from gasoline taxes. With all-electric cars using no gas, EV drivers get (small) free lunch paid for by drivers of gas-guzzling vehicles.

The free lunch might be less than drivers of gasoline-powered cars would guess, though. Already, 37 states collect annual EV fees ranging from $50 to $250 a year. The average is about $142, according to Atlas Public Policy. Some other states collect fees at public charging stations.

As for traditional cars, the amount an average driver might contribute to the FHA's Highway Trust Fund is probably about $100 annually. The new law might seem a little punitive toward EVs, but EVs are a little heavier than gasoline-powered vehicles. More weight can equal more wear and tear on the roads.

The Alliance for Automotive Innovation, which represents many auto makers in Washington, including General Motors and Ford Motor, didn't immediately respond to a request for comment. Tesla, which isn't a part of the AAI, didn't immediately respond to a request for comment.

The latest version of the bill also ends the $7,500 purchase tax credit for qualifying electric vehicles.

And earlier this month, the House voted to strip California's ability to regulate its air quality. The House resolution would need Senate approval and the president's signature to become law.

That legislation could be a problem because California regulations form the basis for much of Tesla's zero-emission vehicle credit sales, which have generated about $2.9 billion over the past 12 months.

California is currently requiring that roughly two-thirds of all vehicles sold in the state be zero-emission by 2030. That's a tall order, with EVs accounting for about 20% of new car sales today. The AAI supports a slackening of California EV regulation.

Electric vehicles appear to be losing policy support on multiple fronts. The annual highway levy is likely the least of the industry's concerns.

Write to Al Root at allen.root@dowjones.com

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May 21, 2025 19:04 ET (23:04 GMT)

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