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How do we fund our roads? A case of decreasing revenue from electric

vehicles

Alan JennPhD Candidate

Carnegie Mellon University

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Running out of money for our transportation infrastructure

Source: Bradley, Bill, Tom Ridge, David Walker. “Road to Recovery: Transforming America’s Transportation”. Leadership Initiative on Transportation Solvency. Carnegie Endowment for International Peace. 2011. p.17

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Where do transportationfunds come from?

One time payments

Sales TaxTitling Fees

Use Fees

Federal Fuel TaxState Fuel Tax

Annual Fees

Registration FeesInspection Fees

Image Sources:http://cimg.internetbrands.com/www.carsdirect.com/330x185/564/used-car-dealer-prices-1564.jpg

http://newsbusters.org/sites/default/files/main_photos/2012/February/Gas%20223.jpghttp://www.plateshack.com/y2k/Pennsylvania5/pa2013sticker.jpg

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Variance of annual fees by state

Registration Fees

Flat fees, annually

or biannuall

y

% of vehicle MSRP

Categorical by

weight, age, or other

characteristic• Alabama

• Alaska• Connecticut• Delaware• Georgia• Illinois• Indiana• Kentucky• Maine• Massachuse

tts• Mississippi• Nebraska• Nevada

• North Carolina

• Oregon• Pennsylvani

a• South

Carolina• Tennessee• Utah• Vermont• West

Virginia• Wisconsin

• Arizona• Colorad

o• Louisian

a• Michiga

n• Minnes

ota• Wyomin

g

• Arkansas• California• Florida• Hawaii• Idaho• Iowa• Kansas• Maryland• Missouri• Montana• New

Hampshire• New Jersey

• New Mexico• New York• North

Dakota• Oklahoma• Rhode

Island• South

Dakota• Texas• Virginia• Washington

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No use fees for electric vehicles (EVs)

• When EVs operate on battery power, traditional forms of revenue flow is bypassed

• Is this a problem for transportation revenues?

Image Sources:http://www.extremetech.com/wp-content/uploads/2012/01/Nissan_Leaf.jpghttp://www.blogcdn.com/www.autoblog.com/media/2011/01/volt-charging-port.jpg

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Sales of EVs are small, for now…

Figure 1: Historical Sales of Electric Vehicles by Model

Figure 2: EIA Forecasts of Electric Vehicle Sales by

category

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Lifetime fees from a Toyota Camry

Figure 3: Spatial breakdown of lifetime fees for Toyota Camry

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Lifetime fees from a Chevrolet Volt

Figure 4: Spatial breakdown of lifetime fees for Chevrolet Volt

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Lifetime fees from a Nissan Leaf

Figure 5: Spatial breakdown of lifetime fees for Nissan Leaf

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Predicting losses in future revenue

Large sources of uncertainty

EIA Projections (use 2013 AEO)

Vehicle travel behavior and

lifetime (assume

average of 12,000 mi, 12

years)

Baseline of comparison

(against growth of average

midsize Toyota Camry)

State sales distribution

(proxy against distribution of Toyota Priuses)

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Average distribution of Prius sales over the last decade

Figure 6: Percentage of Prius sales versus total sales by state

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Difference in distribution of Prius sales versus total sales over the last decade

Figure 7: Difference in percentage of Prius salesversus total sales and average percent sales by model, by state

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Decrease in funding likely to be several hundred million dollars by 2025

• On a national scale, impact is relatively small but growing

• Higher rates of EV adoption will compound existing issues with transportation infrastructure funding deficits

• Future planning to address issue is necessaryFigure 8: Annual revenue decreases

from EVs

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Other funding schemes• Annualized fees (likely coupled

through registration fees)– Link to initial price of the vehicle–Use fee based on mileage of vehicle

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Sensitivity analysis on possible revenue generation plans

Figure 9: Cumulative revenue sensitivity to a percent MSRP based registration fee

Figure 10: Cumulative revenue sensitivity to a per mile based use fee

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Conflicting policies

Incentivize EVs

• Monetary tax credits• Carpool lane access• Emissions inspections exemptions• CAFE/ZEV credits• Cheaper to drive

Disincentivize EVs

• Increased registration fees• Increased use fees

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Conclusions, Future Work• Small (~1% by 2025) but growing

problem needs to be addressed• Finding the right solution is tricky

and politically difficult• Examine effects of alternative

revenue generation policies on total fleet funds

• Equity issues?

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AcknowledgmentsThanks to the Center for Climate and Energy Decision Making for funding and to my advisor Inês Azevedo