Proposed bill in Illinois would raise EV registration to $1000 a year

Tesla Model 3 AWD charging station

Electric vehicle owners and manufacturers are not happy about proposed legislation in Illinois that would raise registration fees on electrically powered light vehicles from just $17.50 to $1000 a year.

When Chicago resident Nicoletta Skarlatos, a self-employed software developer, bought her Tesla Model S in 2014, she was the beneficiary of a combined $11,500 in federal and state tax incentives. She told the Chicago Tribune that the new proposal would be “unfair” and “outrageous.” “I thought Illinois was progressive and would want to encourage EV ownership,” Skarlatos said. “This is going to make people not want to buy EVs.”

There are currently about 15,000 electric cars and trucks registered for road use in Illinois. About 2 percent of annual car and truck sales in the U.S. are electric vehicles, totaling about 200,000 units in 2018. Approximately 6400 of them are in the Land of Lincoln, seventh among U.S. states. Analysts predict that as many as one in five vehicles sold by 2030 will be battery powered.

Tesla opposes the fee increase for electric cars. Rivian, the electric pickup truck startup that just received a $500 million equity investment by Ford Motor Company, plans to start production at its Normal factory in southern Illinois next year. Rivian spokesman Michael McHale told the Chicago Tribune, “Imposing fees on EVs that are over 400 percent more than their gasoline-powered counterparts is not only unfair, it discourages promising new technology that will reduce our dependence on petroleum, reduce emissions, and promote the Illinois economy.”

Like other states in the upper midwest, Illinois has crumbling roads and that infrastructure needs to be fixed. States have typically used fuel taxes to help pay for road construction and maintenance, and electric car owners don't pay any taxes at the pump. For EV users to pay their fair share of road costs, alternatives, like special registration fees, or GPS-based mileage tracking, have been proposed.

Tesla Model 3 AWD charging side view
Gene Leeds
Tesla Model 3 AWD

The proposed legislation in Illinois, introduced last week by state Sen. Martin Sandoval (D – Chicago), would also raise the Illinois state tax on gasoline, doubling it from 22 to 44 cents per gallon, and increase the registration fee for conventional combustion powered vehicles by about 50 percent, from $98 to $148. Hybrids and PHEVs would be considered gasoline-powered under the legislation.

The question then becomes, “What is fair?”

We've done the math. At $0.44/gallon, you'd have to buy 2272 gallons of gasoline to pay $1000 in Illinois state fuel taxes. According to the U.S. Bureau of Transportation Statistics, as of 2016 the fleet average for “light duty” vehicles, which include passenger cars and light trucks, was 22 miles per gallon. At 22 mpg, 2272 gallons will let you travel almost exactly 50,000 miles. There aren't many EV owners that put on that many miles in a year (if any), so yes, $1000 a year seems excessive, perhaps three to four times what most operators of gasoline-powered vehicles would pay in comparable fuel taxes.

As with many examples of proposed legislature, this one will likely change a great deal before it becomes law, if it’s not voted down before that. More than anything, it’s a signal that as more EV models go on sale, state governments are waking up to the potential for lost gasoline tax revenue.