U.S. Auto Industry Proposes Vehicle Fees to Replace Stagnant Federal Gas Tax

The U.S. automotive industry is proposing a transition from the traditional federal gasoline tax to a vehicle-based fee system to fund national road infrastructure. This proposal aims to address the declining revenues of the Highway Trust Fund, which have been eroded by the rising adoption of electric vehicles (EVs) and improved fuel efficiency. The current federal gas tax of 18.4 cents per gallon has remained unchanged since 1993, failing to keep pace with inflation and infrastructure needs. While EVs currently represent only 2.5% of light-duty vehicles in the U.S., their growing market share is significantly impacting fuel-based tax collections. The shift could increase the total cost of ownership for EV owners if the proposed fees are set at high levels, potentially affecting manufacturers like TSLA, GM, and Ford. Furthermore, the move signals a long-term structural decline in gasoline demand, carrying implications for energy-focused instruments such as XLE and USO.