Why EV Registration Fees Are So Dang High

If you just bought a new electric car, you’re probably excited about all its fancy features and avoiding gas stations to save money. However, prepare for some sticker shock when you pay your yearly registration.

Whether this is your first time registering an EV or you’ve done it a few times, you’re probably wondering, “Why are EV registration tags so expensive?” Unfortunately, several factors go into each state’s fees, from the vehicle age or MSRP, not to mention some newer “hidden” charges for EVs.

Even though EVs require less maintenance and don’t need gasoline, get ready to give Uncle Sam more money for that yearly registration.

Electric Vehicles Often Cost More to Register

In the United States, every state requires motor vehicles to be registered with a transportation agency or the Department of Motor Vehicles (DMV). We’re all familiar with that lengthy process to get license plates or updated tags.

Depending on the state you reside in, you’ll pay a different amount for annual or biennial registration fees. These fees can be a flat rate or vary based on vehicle weight, MSRP value, age, or a combination of things.

For example, Colorado is one of the most expensive states to register a car, as it’s based on the age and weight of a vehicle. Many electric cars are quite heavy, making the cost go up. In Iowa, you’ll pay a flat fee and a combination of the vehicle price and weight. So that fancy new Ford F-150 Lightning could cost a pretty penny each year to register.

Most electric vehicles are pretty new, and they’re not all that affordable yet. Combining the high price tags with heavy battery packs, some states could have sky-high fees. Either way, you’ll probably get hit with high registration fees from your car’s weight, age, or value.

Some States Charge Extra for EVs

To make matters worse, over half of the states in America require you to pay an additional registration fee for EVs and hybrids. If you drive an electric vehicle, you no longer have to feel the pain at the pump when gas prices increase. However, states feel that pinch in the form of lost revenue from the gasoline tax.

When drivers fill up on gas or diesel, part of the taxes and fees go into maintaining roads, streetlights, and other infrastructure. By the end of 2019, there were 28 states that added additional “hidden” registration fees for electric vehicles to offset those losses.

Basically, since you’re no longer buying gas, you’re not paying the tax that helps maintain roads and such, so states want you to spend more during yearly registration. Halfway through 2023, we’re up to 32 states that charge you more simply for owning an electric vehicle.

For example, in mid-May 2023, Texas approved a new law that adds an extra $400 to first-time registration for electric vehicles and an additional $200 annual fee each following year.

Even though Texas has toll roads everywhere, those with an EV could be charged an extra $200 each year during registration. California charges $100, Idaho charges $140 for an EV and $75 for plug-in hybrids, and several other states, including Alabama, Arkansas, Ohio, and Wyoming, all charge $200 a year on top of typical registration fees. Those are just a few of the more than 30 states with extra EV fees.

Expect Prices to Increase & More States to Follow

Unfortunately, this is only the beginning. Many Tesla owners on Reddit are already complaining about high registration fees, and as more states follow suit, those fees will grow and expand.

California’s $100 fee will increase annually to match the consumer price index, and since 2021, Mississippi has increased those fees yearly, and they’ll be indexed to the inflation rate. Utah has increased this fee each year by $20 for the last several years, and they’re not the only one. At one point, Illinois tried to increase this to $1,000 per year, but that idea was quickly shut down.

As things sit today, 32 states charge extra fees to anyone with an electric or hybrid vehicle. However, with more and more EVs hitting the streets, we’re expecting the other states to jump aboard the money train.

It’s a bit funny that the government offers a Federal EV tax credit to incentivize people to switch to electric but then charges extra on registration to make up for the difference.

Potential Solutions

As more electric vehicles hit the roads, states are rushing to find solutions to make up for the lack of revenue from gasoline taxes. It wasn’t a perfect system before, and now things are even worse. While a $100 fee for owning an EV sucks, that’s probably less than you’d pay in taxes on gasoline after 365 days.

As a result, many states are looking for alternative solutions to the problem. Instead of taxing gasoline and EV owners, some states are considering adopting a system based on miles traveled. Two terms floating around are Vehicle Miles Traveled “VMT fees” or Mileage-based user fees.

This isn’t a new idea by any means, and a few states are currently running pilot programs for such an idea. With the rise in EVs, we could eventually see some sort of usage-based fee replace registration fees.

These would replace the gas tax and cover all vehicles regardless of whether it uses gasoline or runs on electricity and battery packs. Furthermore, this could be an even better solution and those who use the roads the most would pay more. If you work from home and rarely drive, you’d get charged a lower VMT fee.

Unfortunately, some worry this could end up being an additional fee on top of existing registration charges, but we’ll have to wait and see.

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Either way, whether it’s yearly registration fees, additional charges for electric vehicles, or a new system, you have to pay to play on America’s roads. And the way things are right now, if you have an EV, you’ll likely be paying more when it comes time to register.