Michigan Sets New Fees On Electric Vehicles

Chevy Volt

If you live in Michigan you are almost certain to have a negative opinion regarding the state of our roadways. But that may begin to change now that legislation finally goes into effect raising the state gasoline tax and vehicle registration fees.  Beginning on January 1, 2017, the state also began adding extra fees on electric and certain hybrid-electric vehicles.

The legislation raises overall registration costs by 20% per vehicle and increases the state gas tax by 7.3 cents. Electric vehicles, however, will see an additional annual surcharge of $100 plus a $35 additional gasoline tax fee. Owners of hybrid-electric vehicles with at least a 4kWh battery (essentially, plug-in hybrids) will pay a $30 annual surcharge and a $17 additional gasoline fee. Altogether, the state has estimated that these measures will raise $600 million annually in fees and taxes for transportation purposes, which includes fixing the roads.

As Green Car Reports notes, the additional fees aimed at electric vehicle owners are due to the fact that they don’t burn enough gasoline to generate the same state tax revenue as gasoline powered vehicles. The language of the law states that a hybrid is “a vehicle that can be propelled at least in part by electrical energy and uses a battery storage system of at least four kilowatt-hours, but is also capable of using gasoline, diesel fuel, or alternative fuel to propel the vehicle.” Despite that clear language, many owners of hybrids whose batteries do not have a storage system of at least four kilowatt-hours have been getting charged as if they do.

In another troubling development, the Secretary of State also interpreted that the state’s iconic plug-in Chevy Volt be classified as a “non-hybrid” vehicle and charged the higher $100 fee.  This was based on the logic that the Volt’s gasoline engine does not actually “propel” the vehicle, but simply recharges the battery.  This kind of wrong-headed thinking is enough to drive EV owners crazy, which might have been the point.  

The Michigan Secretary of State’s office has stated that it is working on fixing the issues with fee discrepancies for electric vs. hybrid vehicles, and as of press time, we’ve gotten a report that the Volt will be re-classified as a hybrid.  Considering that the new Volt and other EV’s are seeing an uptick in sales (see below), we hope these issues get resolved quickly and that the new fees do not create a potential barrier to EV ownership.