China has built the world's largest electric-vehicle fleet — over 40 million units by mid-2026 — but an unintended consequence is now surfacing: these vehicles contribute almost nothing to the fuel-tax pool that traditionally funds road construction and maintenance. The question "who pays for the roads?" is no longer academic.

The funding mechanism at risk

In China, as in many countries, a significant portion of road funding comes from fuel excise taxes embedded in gasoline and diesel prices. Every liter of fuel sold includes a tax component that flows into transport infrastructure budgets. Internal-combustion vehicles thus pay for roads every time they fill up.

Electric vehicles bypass this system entirely. They consume electricity — which may be taxed differently or not at all for road purposes — and they cause pavement wear comparable to conventional vehicles, especially heavier EV models with large battery packs.

The scale of the gap

With over 40 million NEVs on the road and annual sales exceeding 10 million, the fuel-tax base is shrinking while vehicle-kilometers traveled continue to rise. Estimates suggest the annual shortfall could reach tens of billions of yuan within this decade if no replacement mechanism is introduced.

What solutions are being discussed

  1. Road-user charging by distance. A per-kilometer fee collected through GPS or annual inspection data, applied equally to all vehicle types.
  2. Electricity-based road levy. Adding a road-maintenance surcharge to EV charging, though this raises equity concerns for home-charging versus public-charging users.
  3. Annual registration fees scaled by weight. Since heavier vehicles cause more road damage, a weight-based annual surcharge on vehicle registration could recover some costs.

The bigger lesson

Policy transitions create fiscal gaps. When a government successfully promotes one technology (EVs) to solve an environmental problem (emissions), it can inadvertently break the funding model for a different public good (roads). The EV road-funding question is a case study in why system-level thinking must accompany single-policy successes.