Michigan's electric vehicle drivers might get an unpleasant birthday surprise in 2026 due to a controversial new budget policy, Michigan Public reported.

What's happening?

As more Americans switch to EVs and the country's vehicle landscape evolves, change begins to occur at scale.

There are intentional outcomes, like a broad reduction in tailpipe emissions and lower demand for fossil fuels. But there are also unplanned consequences.

In Michigan, traffic infrastructure maintenance is partly state-funded, and around half of those funds come from taxes levied on gasoline. When lawmakers considered a potential shortfall in the state's 2026 budget, they proposed raising Michigan's EV registration fees.

When they finalized and passed a 2026 budget, it included novel registration fees for EVs and hybrids, which increased by $50 and $100, respectively.

Before Michigan's 2026 budget was adopted, Michigan Energy Innovation Business Council energy policy expert Sophia Schuster pointed out that the proposed fees would be "the highest" in the U.S., effectively penalizing EV drivers for going electric, though they would still be saving quite a lot per mile if driving the car enough, in addition to enjoying lower maintenance costs, such as no oil changes.

After it passed, Schuster told Michigan Public that the change would only rustle up an additional $8 million a year, which was "really a drop in the bucket" for Michigan's roads.

While Michigan's residents were not likely to "realize significant benefits" from the policy change, Schuster surmised that ​​EV drivers would be "significantly impacted."

Why is Michigan's new EV tax concerning?

According to the Michigan-based automotive industry association MichAuto, EV adoption in the state has been slow-going, but steady.

Its annual "Michigan EV Assessment" indicated that EVs and plug-in hybrids captured 6.5% of Michigan's market share, "up from 0.77% in 2020." 

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While the organization isn't EV-specific, it maintained that, as the automotive industry continued "to transition from internal combustion engines toward more environmentally sound transportation," it was "essential" that Michigan foster EV adoption.

MichAuto added that Michigan anticipated 51% of cars on the road would be EVs or PHEVs by 2030 — an ambitious objective in what is historically the hub of the American automotive industry.

In 2023, Michigan Gov. Gretchen Whitmer set a goal of two million EVs on Michigan roads by 2030, and the new EV tax appeared to sit directly at odds with it. 

Schuster, who previously said the fees were "discouraging [EV] adoption," observed that before the change, Michigan's EV drivers were "already paying" more in fees than drivers with gas-powered cars. It can also be said that the $8 million gained by the tax could instead be seen, if axed, as an investment in improving air quality and reducing gasoline and oil spills in and around roads. 

"Unfortunately, I think that the impact to EVs was an unintended consequence of what needed to happen to get the road package passed," she told Michigan Public.

What's being done about it?

Even with the new fees, Michigan EV drivers will still save a significant amount each year by not buying fuel.

However, prospective and current EV drivers can contact their lawmakers to object to the new fee structure.

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