Highway Financing in the Era of Electric, Connected, and Automated Vehicles : A Distance-Based Alternative to the Fuel Tax

As the world transitions towards electric, connected, and automated vehicles (ECAVs), asset managers continue to prepare physical infrastructure investments needed to accommodate these technologies. With increasing ECAV adoption, the revenues typically earned from vehicle registrations and fuel tax are expected to change due to changing demand for vehicle ownership, amount of travel, and loss of fuel tax revenues due to vehicle electrification. There is therefore a need to quantify the extent of these impacts and explore alternatives for efficient and sustainable highway financing mechanisms. This paper proposes a revision to the current user fee structure, a variable tax scheme. Under this scheme, each vehicle class pays a different fuel tax rate, commensurate with the level of system usage, and consequently, cost responsibility. Vehicles with electric propulsion pay by distance. This ensures that both equity and system efficiency are maintained during the transition to ECAV