Faced with the fact that improved fuel efficiency is translating into lower gas tax receipts, several states have instituted, or are considering, special fees on electrified vehicles. A fee proposal currently making its way through the Michigan legislature has drawn opposition from an automakers’ trade group.

In a recent letter to Michigan Senate Majority Leader Arlan Meekhof, the Alliance of Automobile Manufacturers, which represents a dozen global automakers, said lawmakers should be offering incentives to buyers, not raising fees.

“Public policies that negatively differentiate advanced technology vehicles – such as electric and hybrid vehicles – discourage consumers from adopting these new technologies,” wrote Wayne Weikel, the alliance’s State Government Affairs Director (via Crain’s Detroit Business). “Consumer choice is the key factor in driving competitiveness in the marketplace, and state policy should not penalize residents of Michigan who purchase one vehicle over another.”

At this point, the argument would seem to be over the principle of the thing, as the amounts of money at issue in Michigan are relatively small. The state is proposing a yearly fee of $30 for a hybrid and $100 for an EV, which the House Fiscal Agency estimates could generate between $764,000 and $2.5 million annually.

In its letter, the automakers’ alliance recommended a lower fee of $25 for a PHEV and $75 for a BEV.

In 2014, Michigan registered 337 new EVs and about 12,400 hybrids, according to IHS Automotive – small potatoes compared to California, which registered more than 29,500 EVs and nearly 145,500 hybrids.

State Representative Eric Leutheuser, the sponsor of House Bill 4612, defended what he called conservative fee increases. “You don’t want to discourage innovation. You don’t want to discourage early adopters,” said Leutheuser, who owns Buick and GMC dealerships, “[but] we pay for our roads with two things [fuel taxes and registration fees]. I want to make sure I’m applying those as fairly as possible.”

Other states do charge higher EV fees. Idaho charges owners of plug-in and hybrid vehicles annual fees of $150 and $100, respectively. Georgia recently eliminated its purchase incentives and added an annual license fee of $200 for passenger EVs and $300 for commercial vehicles.

Toyota has proposed replacing the state’s gas tax with a flat fee of $140 per vehicle, which it says would be technology-neutral, wouldn’t discourage new technology and doesn’t evoke Big Brother, as would a fee based on the number of miles traveled.

IHS Senior Analyst Stephanie Brinley believes that lawmakers should wait a few years to see how the EV market develops before taking action. “We’re trying to answer a question legislatively that hasn’t been handled in the market yet,” said she. “I would almost say any answer is wrong right now. We just don’t know how it’s going to play out yet.”

Source: Crain’s Detroit Business