New-Energy Vehicles Top 60% of China Car Sales as Fuel-Tax Revenue for Roads Declines

New-energy vehicles accounted for more than 60 per cent of new car sales in China last month, according to data from the China Passenger Car Association. The shift is widening a fiscal shortfall for local governments responsible for maintaining ordinary roads, because electric cars generate no petrol-tax revenue yet add to repair demands.

In 2021 the petrol tax covered more than 80 per cent of China’s annual maintenance costs for ordinary roads, researchers at the Transport Planning and Research Institute found.

The central government collects the tax and distributes the proceeds to local authorities that carry out the work. Most roads in China generate no direct revenue. The country operates some toll expressways, but ordinary roads have long depended on fuel-tax receipts.

Electric cars are heavier than petrol cars and place road surfaces under greater strain, increasing the volume and cost of repairs as the network ages. @SCMPNews reported that the combination of rising repair needs and falling fuel-tax income is creating a growing fiscal black hole for local governments.

The article noted that the rapid adoption of electric vehicles, while viewed as an economic success, has simultaneously undercut the main funding source for road upkeep.