Revenue from Fuel Tax Drops as Germans Switch to EVs

Germany’s fast shift toward electric cars is starting to squeeze a revenue stream the government has counted on for decades: the tax collected every time someone fills up. As more drivers plug in instead of pulling into a gas station, officials are having to figure out how to replace billions of euros that used to flow in automatically.

EV sales across the EU climbed close to 30% over the opening three months of 2025 compared with a year earlier, according to the International Energy Agency. Norway sits furthest along that curve, with electric models now representing roughly 95% of new registrations, but Germany’s current tax setup shows exactly what’s at risk. A gallon of gasoline carries a tax of roughly $2.85, with diesel taxed at about $2.04 a gallon, plus a carbon surcharge and Germany’s standard 19% VAT.

Motoring club ADAC calculates that out of a roughly $9.12 gallon of gasoline, about $4.96, more than half, goes straight to the state. Kiel Institute economist Jens Boysen-Hogrefe said that the system has long been a reliable earner for the treasury, and that finance officials see little upside as more drivers switch over since electric charging brings in only a fraction of that in electricity tax.

Germany’s Federal Statistical Office says last year’s energy-tax taken from gasoline and diesel sat at $37.8 billion, down from $42.4 billion back in 2016. A 2022 government advisory report went further, warning that revenue could sink to just $5.7 billion by 2050 if the current trajectory holds, on top of the ongoing cost of subsidies still propping up the transition.

Berlin ended its EV purchase incentives before 2024 arrived, though EV owners won’t face the vehicle tax until 2035, and companies buying electric fleets still receive certain tax perks.

Boysen-Hogrefe warned that fiscal pressure will only build as adoption accelerates, and that any fix will take years to put in place given how long new tax measures typically take to pass. Other governments aren’t waiting. Norway has scaled back its longstanding VAT break for electric cars and introduced a weight-based tax on new registrations, plus tolls.

The UK plans a per-mile charge on electric cars starting in 2028, while Switzerland is introducing its own fix from 2030, charging EV drivers either by distance or via a tax on the electricity they buy at charging stations. New Zealand and Iceland instead check EV odometers once a year, using the mileage readings to set fees.

In Germany, the conversation remains at the proposal stage. A University of Münster study recommends a distance-based road toll as the ideal fix, but concedes that a flat-fee vignette system might be the more politically realistic option if a full toll proves too controversial, leaving a straightforward hike to the vehicle tax as the last resort.

As governments think of how to replace the tax revenue that was coming from gasoline sales, electric vehicle makers like Massimo Group (NASDAQ: MAMO) will be hoping that any decisions made don’t end up rolling back the rate at which EVs are being adopted by motorists.

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