Would VMT hurt hybrid sales?

Killing the gas tax

In 2008 there was a $140 billion budget shortfall in highway funding that helped crunch many state budgets, and the problem is only expected to worsen as new CAFE requirements take effect.

Thus, many states and the Feds are considering a move away from a gas tax to a Vehicles Miles Traveled tax.

Since a good chunk of the price of gasoline goes to taxes, hybrid vehicles and plug-ins can avoid a large percent of this tax compared to other vehicles. However, a VMT tax would take away this advantage.

Would a VMT tax hurt hybrid and plug-in sales?

Would a VMT tax kill fuel efficiency, EVs?

An electric car killer?

When gas prices surged this summer, demand for hybrid cars was intense. High fuel prices made fuel efficient vehicles a very valuable commodity.

Yet, the future may not be driven by fuel prices, but mileage driven if Transportation Secretary Ray LaHood and many in the White House have their way. Instead of increasing gas taxes to fund the growing gap in infrastructure funds, the future may by a computer chip in your car that enables the government to charge drivers for miles driven.

But couldn't that kill the electric car?

The cost premium between electric cars and conventional vehicles is steep and it will be for at least a decade, maybe decades. Many believe this cost will be significantly recovered via the relative cheapness of electric power versus gasoline. However, won't pushing Americans to drive less - via a VMT tax - lead to less oil demand and cheaper oil prices?

Of course, the same could be said of electric cars. As they are embraced, there will be less demand for fuel and, therefore, cheaper fuel prices. Ironically, however, electricity prices will increase.

Essentially, our entire automobile culture no longer makes economic sense, at many levels, and fixing that problem is going to have a huge effect on American car culture, beyond just new efficient technologies or even fuel prices.

I'm sure glad I live close to a subway line.