In 2024, private cars in France generated nearly 24 billion euros in excise duties and value-added tax (VAT), according to economist Eric Pichet of Kedge Business School. If the country transitions to a predominantly electric vehicle (EV) fleet, this revenue could drop significantly. A fully electric fleet would generate only 4 to 5 billion euros through electricity taxation. While the topic of compensating for this potential revenue loss is being discussed in France, no official measures have yet been announced.
New Zealand introduced electric vehicles into its "Road User Charges" system on April 1, 2024. Light electric vehicles are charged 76 New Zealand dollars (about 38 euros) per 1,000 kilometers, while plug-in hybrids pay half that amount. Mileage is declared and verified during technical inspections. Iceland also began applying similar charges to electric vehicles and hydrogen-powered vehicles in 2024, with plans to expand the system to all vehicles by January 1, 2026. The rate is 6.95 crowns per kilometer for vehicles under 3.5 tonnes, with higher rates for heavier vehicles. The government estimates mileage and bills drivers monthly.
The United Kingdom is set to introduce a similar tax called the Electric Vehicle Excise Duty (eVED) starting in April 2028. Electric vehicles will pay about 2.2 cents per kilometer, and plug-in hybrids will pay 1.1 cents. This tax will be added to the existing circulation tax (VED) already paid by electric vehicles since 2025. Mileage will be declared and checked during technical inspections, without the need for GPS tracking. On average, this tax would amount to about 268 euros per year for someone driving 12,200 kilometers annually.
The UK government argues that drivers who travel more should pay more, a principle already applied in several U.S. states, including Oregon, Utah, and Hawaii. In France, no kilometer-based tax has been officially announced, but the idea is under consideration. The Direction générale du Trésor estimated that the shift to electric vehicles could lead to a revenue shortfall of 13 billion euros by 2030 and 30 billion euros by 2050.
The Council of Mandatory Levies, linked to the Court of Auditors and led by Amélie de Montchalin, has reviewed several options to offset the loss of revenue from fuel taxes. A kilometer-based tax on private cars might conflict with European law, so the report suggested an annual holding tax of about 95 euros. Other proposed solutions include mileage checks during technical inspections, on-board telematics, or a surcharge on vehicle registration. The idea of a weight-based penalty has been discussed for years.
A kilometer-based tax aims to charge more for those who drive more, avoiding the need to separate a car’s electricity use from other household electricity. However, this approach could disproportionately affect rural residents with fewer transportation alternatives. Not all kilometers have the same impact on the community, and adjusting rates based on location or time would require GPS tracking, raising privacy concerns. Additionally, models from smaller countries like New Zealand and Iceland may not directly apply to France. For electric vehicle drivers, the timing and level of any new tax remain unclear. The examples show that the shift to electric vehicles will not eliminate automotive taxation but will change its foundation.
European Nations Explore Kilometer-Based Taxes as Electric Vehicle Adoption Grows
AI-rewritten from original reportingHow it works
electric-vehiclestaxationrevenue-lossmileage-taxfranceenvironment-policy



