The electric vehicle transition and vanishing fuel tax revenues

Abstract As electric vehicle adoption accelerates globally, fuel tax revenues decline, exposing government budgets without a proposed replacement tax on electric vehicles. We estimate fuel tax transition exposure across 168 countries, demonstrating that relative exposure, in percentage of total government revenues, varies substantially by income level. Our analysis finds that global public revenues from fuel taxes totalled approximately US$900 billion in 2023. Crucially, we show that lower-income countries face disproportionately high exposure, experience frequent debt crises and possess limited institutional capacity to respond, potentially necessitating international support.