China’s EV Shift Creates a Growing Hole in Road Repair Funding
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China is grappling with an unintended consequence of its electric-vehicle (EV) boom: a growing shortfall in the tax revenue used to build and maintain roads.
The urgency is increasing as domestic sales of gasoline cars fell 39% from a year earlier in May, according to the China Passenger Car Association, reducing their market share to a record low 37.1%.
For years, taxes linked to gasoline consumption have helped fund the country’s vast network of roads. As more drivers switch to battery-powered cars that consume little or no fuel, that funding model is coming under increasing strain.
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- China's EV boom reduces fuel tax revenue for roads; gasoline car sales fell 39% in May, market share at 37.1%.
- EVs avoid fuel taxes but are heavier, increasing road wear; maintenance funding meets only about 50% of needs nationwide.
- Proposals include taxing EV electricity or mileage-based tax, but face implementation hurdles; fuel tax revenues peaked in 2023.
- 2023：
- China's fuel consumption peaked, according to a person familiar with policy discussions.
- 2024：
- A research paper by Zhang Yuling of the Ministry of Transport's Research Institute of Highway estimated that available funding meets only about half of annual maintenance needs for ordinary highways nationwide. Also in 2024, Shi Zhengwen, a professor at China University of Political Science and Law, wrote that China was planning a new round of fiscal reforms that could provide an opportunity to adjust the scope and collection methods of automobile-related consumption taxes.
- 2025：
- China's gasoline-vehicle fleet reached its peak, signaling that fuel tax revenues could begin to decline while road maintenance funding needs continue to rise, according to a person familiar with policy discussions.
- 2026 (as of May)：
- Domestic sales of gasoline cars fell 39% from a year earlier, reducing their market share to a record low 37.1%, according to the China Passenger Car Association.
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