TL;DR: As governments move toward "pay-per-mile" road pricing to replace declining fuel duties, we face a choice: use technology to steer better behavior or turn it into an unpredictable revenue-grab. For the automotive industry, the key to success is moving away from "dynamic" pricing toward predictable, transparent data.
The era of "dumb" vehicle taxation is coming to an end. For decades, governments relied on a steady stream of income from purchase taxes, annual road tax, and fuel levies. But as Electric Vehicles (EVs) go mainstream - a transition we all want - that revenue is disappearing because EVs don't pay fuel excise duties.
The replacement? Road-usage charging, or "pay-per-mile." While often pitched as the "fairest" system ever devised, there is a hidden danger that could strike at the very backbone of our economy.
Executive summary: The road pricing dilemma
The danger of real-time revenue grabs
The seductive vision of road pricing is a country without congestion. But my concern is what happens when this algorithm isn't used to guide behavior, but to plug budget deficits.
If the price per mile begins to fluctuate minute-by-minute based on real-time demand, we enter a state of algorithmic strangulation.
- Necessity vs. luxury: Movement isn't a luxury. A teacher cannot choose when the school day starts, and a service technician must reach customers regardless of peak-hour surcharges.
- The "cash cow" risk: These essential workers become the cash cows of an automated system they cannot escape.
Why stability is the backbone of business
For a fleet manager or a leasing company, the single most important factor is the Total Cost of Ownership (TCO). You cannot sign a four-year contract when the cost of usage is a moving target controlled by a "black box" algorithm.
In the UK, the Treasury is already preparing to introduce a pay-per-mile tax specifically for EVs to replace lost fuel duty. While this is a step toward a new model, applying it only to electric vehicles risks undermining the transition to cleaner transport. Fairness must be based on the impact a vehicle has on the road, not its drivetrain.
Perspective: the path to fair road usage
Technology is merely an instrument; how we use it defines our success. To make road pricing work, we must prioritize predictability and trust through three core principles:
- Eliminate minute-by-minute dynamics: We must move away from prices that change constantly. Tariffs should be transparent and fixed for at least a year.
- Focus on steering, not punishment: Use surcharges for urban peak hours and discounts for EVs to encourage better choices, but keep these rules clear and plan-able.
- Visual consistency in data: Whether you are configuring a car or planning a route, you need stable, visually consistent data to make an informed decision.
Key takeaways
- The revenue gap: Governments are moving to pay-per-mile to replace lost fuel duties from the EV transition.
- TCO risk: Real-time dynamic pricing makes business planning and long-term leasing impossible.
- Essential movement: We must protect those who cannot choose their driving times from being unfairly taxed.
- Transparency first: Fair pricing requires fixed, clear tariffs that allow fleet managers genuine freedom of choice.
