TN will triple its dumb EV tax for inflation, but its gas tax lags inflation by ~5x
Tennessee has started the process of hiking its EV registration fee from $100 to $274 per year and beyond, aiming to continue hiking the fees in perpetuity, further increasing the disproportionately high taxes paid by EVs in the state as compared to gas cars.
We’ve covered many times before how misguided these taxes are, not least of which because they are the result of a cynical lobbying ploy by the oil industry to disadvantage a better transportation method.
Tennessee’s $100 fee was lower than that of many other states, but it still taxed EVs at a much higher rate than a similarly-efficient gas vehicle. For example, a ~140mpg gas car, if it existed, would pay ~$28 in gas taxes in a year if driven 15k miles, but a 140mpge EV, which there are multiple of, used to pay $100 even if it was low mileage. As a flat fee, it also adds a small disincentive for drivers to remain low mileage, which doesn’t help with congestion or road usage.
This year, Tennessee’s EV fee has doubled to $200 – but it’s not stopping there, with the state claiming that it will continue increasing to $274 in 2026, and then continue increasing beyond that along with inflation. Tennessee lawmakers and the Department of Transportation commissioner had asked to raise the fee to $300, which would have tripled the already-disproportionate fees that EVs pay.
But one big issue here is: inflation was not 100% last year, and won’t be 37% in the next two years. These hikes are well beyond inflation, on top of a fee that was already too high per the calculations above.
Not only that, but the gas tax has not been indexed to inflation in Tennessee. In fact, the gas tax has lagged inflation significantly, getting smaller over time in comparison to the value of a dollar. You can see a history of Tennessee gas taxes here, showing that drivers used to pay 7 cents per gallon in 1931, but only pay 26 cents now (plus a “1.4-cent special petroleum fee“). If gas taxes had kept up with inflation since then, they would be $1.42 per gallon – meaning they’re ~5.4x too low, compared to inflation.
But that’s because gas taxes didn’t go up for 50 years in Tennessee, until there was a measly 2 cent bump in 1981. Starting our calculations from that year, gas taxes are a lot closer to keeping up with inflation, but still should be about 20% higher than they currently are – and that’s without accounting for 2023’s inflation or the next few years’ worth which will be captured by this near-tripling of EV fees.
What’s worse, this year’s tax hikes were not well publicized, and many Tennessee EV drivers were left in shock with a doubling of fees from one year to the next.
If this trend keeps, then the gulf between TN’s gas tax and EV tax would continue to increase, becoming more and more unfair to EV drivers who already pay more than if they were driving a similarly-efficient gas vehicle, and much more than the amount of damage they’re doing.
The rationale for Tennessee’s tax is similar to those in other states – Tennessee is laboring under the misguided notion, propagated by Koch/fossil fuel industry propaganda, that electric vehicles don’t pay for roads. But in fact, the vehicles that are doing damage to roads also don’t pay for the damage they’re causing to roads – gas + license taxes only cover ~60% of Tennessee’s road costs, which means that fossil-powered vehicles are freeloading on at least a third of the road budget anyway.
And in actuality, virtually all road damage is done by diesel semi trucks anyway, not gas or electric cars, so road damage has little to do with passenger vehicles. An average EV does tens of thousands of times less damage to roads than a semi truck over the course of the year, so if a $274 fee is considered fair for an EV, then semi trucks should be paying registration fees in the millions of dollars – and if the latter sounds too high, then simple math means one must also acknowledge that the former is too high, if road damage is the main concern.
On top of this, gas taxes certainly don’t pay for the immense damage that burning gasoline causes, which cost society about $4 per gallon burned. The total cost of subsidies to dirty energy in America, a large portion of which goes to gasoline for motor vehicle use, was $760 billion in 2022. Few states even attempt to correct for this subsidy, with only a few having any sort of pollution pricing scheme. So gas vehicles are freeloading on our lungs even moreso than they’re freeloading on the roads.
The real solution, as ever, is to implement a drivetrain-agnostic road fee that takes into account weight and mileage, and another drivetrain-agnostic pollution fee to correct for the damage that each vehicle causes in pollution (these can be added to energy costs, tire costs, etc.). But instead, Tennessee would rather bow to fossil fuel propaganda and attempt to balance its entire road budget by overtaxing the 22,040 EVs in the state instead of implementing a long-term solution that might make gas cars (and diesel trucks) start paying their fair share.
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Leading electric vehicle analyst, author, and industry thought leaders Loren McDonald and Bill Ferro stop by Quick Charge to discuss EV Adoption’s acquisition by Paren, the “crisis” of EV charging reliability, and the real state of the EV market.
Depending on who you listen, EVs are either driving brands to record growth and are about cross that critical 10% of the overall market nationwide, or the future is bleak, the market is down, and EVs just aren’t selling. What’s really going on? Loren and Bill (probably) have some answers.
Today’s episode is sponsored by BLUETTI, a leading provider of portable power stations, solar generators, and energy storage systems. For a limited time, save up to 52% during BLUETTI’s exclusive Black Friday sale, now through November 28, and be sure to use promo code BLUETTI5OFF for 5% off all power stations site wide. Click here to learn more.
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Read more: All my favorite EVs, racecars, and robots from Electrify Expo Austin.
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Chevy EV owners in Texas who have Reliant as their electric utility can now charge for free at night with renewable energy.
Over 150 Chevrolet dealerships across Texas are now offering the Reliant Free Charge Nights plan to new EV buyers. With Free Charge Nights, customers can offset their charging costs by receiving credits for electricity used between 11 pm and 6 am. The plan is powered entirely by renewable energy, thanks to the purchase of renewable energy certificates (RECs).
Rasesh Patel, president of NRG Consumer, says the plan is about making power personal: “We’re excited to help Chevrolet EV drivers offset the cost of charging their vehicle all while having access to a renewable electricity plan.”
This collaboration aims to make EV adoption more appealing by making charging cheaper and greener. GM Energy’s chief revenue officer, Aseem Kapur, emphasized that partnerships like this help build the ecosystem needed to support an all-electric future: “The Reliant Free Charge Nights plan is a great example of how an automaker and an energy company can work together to make EV adoption an easy decision.”
Existing Reliant customers can also sign up for the Free Charge Nights plan. To get started, Chevrolet EV owners need to designate their vehicle on the GM Energy Smart Charging Portal before enrolling in the plan.
Reliant Energy, a subsidiary of NRG Energy, serves over 1.5 million customers in Texas, making it one of the largest electricity providers in the state.
Read more: Texas to get 1 GW AI-powered virtual power plant, enough to power 200,000 homes
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Texas is about to get a major power boost – a new AI-powered virtual power plant (VPP) delivering capacity equivalent to 200,000 homes during peak demand.
NRG Energy is teaming up with Renew Home to bring nearly 1 gigawatt (GW) of capacity to the Texas grid by 2035, aiming to make it more resilient while helping residents save on energy costs.
The new VPP will rely on hundreds of thousands of smart thermostats and other connected home devices, making use of AI technology provided by Google Cloud. These devices, like Vivint and Nest smart thermostats, will be offered to eligible customers at no cost. By automating HVAC adjustments, they help shift energy use to when electricity is cheaper, cleaner, and less strained.
NRG and Renew Home have big plans for the VPP. Starting in spring 2025, the companies plan to roll out the program across Texas, installing these smart thermostats in homes served by NRG’s retail electricity providers. Eventually, they plan to add home battery storage and EVs to expand the power plant’s capabilities.
Texas has faced record-breaking energy demands, with peak usage hitting 85 GW in 2023. As the state’s population grows and extreme weather becomes more frequent, VPPs like this one could play a key role in stabilizing the grid. VPPs aggregate a lot of small-scale energy resources, from smart thermostats to home batteries, and use them to help balance supply and demand during times of high stress on the grid.
This nearly 1 GW VPP will be one of the largest of its kind in Texas. NRG’s president of consumer operations, Rasesh Patel, calls it a “pivotal step” for improving customer experience while making Texas’ energy infrastructure more sustainable and resilient.
In addition to Renew Home, NRG is working with Google Cloud to maximize the power plant’s effectiveness. Google Cloud’s AI and analytics tools will help predict weather conditions, forecast renewable generation, and optimize energy usage, all of which will help make energy management smoother for both customers and the grid.
Ben Brown, CEO of Renew Home, said:
NRG’s commitment to creating a more resilient and sustainable energy future while also making electricity bills more affordable makes them an ideal partner for co-developing this unique VPP program.
This initiative raises the bar for future-proofing our electricity infrastructure and delivering cost savings to customers.
Read: Chinese solar giant Trina sells its Texas factory a week after it opens
To limit power outages and make your home more resilient, consider going solar with a battery storage system. In order to find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. They have hundreds of pre-vetted solar installers competing for your business, ensuring you get high-quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use and you won’t get sales calls until you select an installer and you share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –trusted affiliate link*
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