EVs may contribute to predicted road funding hole

A hole in funding for roads may develop as more electric and fuel-efficient vehicles arrive here.

The high uptake of technology, quickly increasing EV numbers and the improved fuel efficiency in petrol vehicles could lead to a funding gap, it has been reported.

Much of the government funding for roads comes from fuel taxes and charges paid by petrol and diesel vehicle owners.

While EVs are covered by road user charges (RUC), they won’t be contributing until after December 31, 2021, under current exemptions. Heavy EVs (electric trucks) start paying RUC when they reach 2% of the total fleet.

The AA is keen to see more work done by the government around the future of the Fuel Excise Duty and the transport funding model, its motoring affairs and infrastructure principal advisor Barney Irvine says

“If we see a steady increase in the fuel efficiency of the petrol fleet, it’s going to put the fuel tax system under strain. We really need to better understand how and when that increase is likely to occur, and what the options could be to change the system to deal with it,” he says.

“As part of that work, we’d like to see how EVs are going to fit into the system once the exemption is lifted. Of particular interest to us is how the e-RUC system could be adapted and developed to accommodate them.”

Lost revenue for roads through EVs not paying RUC and other charges could be as high as $70 million by the end of 2021, Radio New Zealand reports.

We covered the issue in the lead story “EV’s avoid charges – for now” in our EVtalk November magazine.

Automotive industry experts say questions need answering soon on who will pay for roading and related infrastructure as most road users pay levies when they buy fuel.

Some believe the days of a fuel tax are numbered, and Auckland’s proposed regional fuel tax means EVs dodge that too.

Drive Electric chairman Mark Gilbert says in the EVtalk story that it’s been on record for some time saying the model of revenue gathering for road infrastructure is broken. He believes the government and associated agencies need to start looking now at how EVs and other vehicles will pay for that and road maintenance.

Gilbert says New Zealand cannot continue doing “the same old thing” around charging to cover roads and other costs.