Why Michigan’s Automakers Should Lead on Road Usage Charging
Michigan’s automotive industry has spent the last decade re-engineering the vehicle: electrifying powertrains, getting more miles out of every gallon, and building cars that need no gas at all. It is one of the great success stories of American manufacturing. It has also quietly broken the model that funds the roads those vehicles drive on, and no industry has more at stake in fixing it than the one that builds the cars.
The federal gas tax has been fixed at 18.4 cents per gallon since 1993. It was never indexed to inflation, so its purchasing power erodes every year. Add three decades of fuel-efficiency gains and a fast-growing fleet of hybrids and electric vehicles (EVs), and the result is a revenue source that shrinks as vehicle technology improves. Federal Highway Administration (FHWA) data for fiscal year 2026 shows year-to-date net tax receipts to the Highway Trust Fund’s Highway Account down more than 24 percent from the same point last year, and the Highway Trust Fund is projected to become insolvent by 2028.
For an industry built on innovation, there is real irony here. The more successful Michigan’s OEMs are at building efficient and electric vehicles, the faster gas tax revenue declines, and the more pressure legislators face to find a replacement, often without automaker input. A per-mile road usage charge (RUC) offers a sustainable
alternative. Instead of taxing the fuel a vehicle consumes, it charges drivers for the miles they travel, regardless of what powers the vehicle.
RUC is not a theoretical proposal. Oregon’s OReGO program has operated a live road usage charging system since 2015 and is scheduled to transition to a mandatory program in July 2027. As the nation’s first RUC program, OReGO has provided realworld proof that mileage-based funding works, and its success has helped spur pilots and programs across the country. As a Commercial Account Manager (CAM) for OReGO, GeoToll has firsthand insight into what will ultimately determine the success of RUC: the efficient, secure, and reliable flow of mileage data from the vehicle to the program back office. That makes RUC more than a public policy issue. It is a data, connectivity, and systems integration challenge, which makes it an OEM issue.
Every RUC program depends on reliable mileage reporting. Early programs relied on plug-in devices and manual odometer submissions. These methods work well for pilots, but they add cost, complexity, and friction for drivers and agencies alike. Device procurement, inventory management, shipping, connectivity, and ongoing support make hardware-based reporting expensive and difficult to scale.
The more efficient path is one Michigan’s automakers are uniquely positioned to deliver: native vehicle telematics. Most new vehicles already include telematics systems for diagnostics, safety notifications, and connected services, and those same systems can provide secure, automated odometer reporting. This gives automakers the opportunity to help define industry standards for mileage reporting, privacy protection, and data transmission before a patchwork of state-specific requirements takes hold. By collaborating on secure, standardized methods now, OEMs can reduce future costs, simplify compliance, and help shape an efficient national framework for mileage-based road funding.
Telematics also addresses the central challenge to public acceptance of RUC: trust. Drivers want assurance that their movements are not being tracked, and agencies need accurate, auditable mileage data. Odometer-based reporting through direct OEM integration meets both needs. By transmitting only periodic odometer readings
associated with a VIN, manufacturers can support road funding programs without sharing trip-level data, location history, or GPS information. For drivers, it is the simplest way to participate: no plug-in device, no manual odometer submissions, and no added administrative burden. Many EV owners may also pay less than the higher flat registration fees often imposed on electric vehicles, because they pay for the miles they actually drive rather than a one-size-fits-all surcharge.
Automakers benefit as well. Using existing telematics infrastructure eliminates the cost and complexity of third-party hardware while providing a high-value service to customers and public agencies. As more states adopt RUC programs, OEMs that establish secure mileage-reporting capabilities early will be well positioned to create new revenue streams, strengthen customer relationships, and expand the value of their connected vehicle services. Direct OEM integration aligns the interests of drivers, agencies, and automakers, delivering accurate mileage reporting, sustainable transportation funding, lower program costs, and strong privacy protection in a single solution.
The gas tax served the transportation system well for generations, but it was designed for a different era. As vehicles become more efficient and increasingly electrified, sustainable transportation funding will depend on solutions that are fair, technology-neutral, and scalable. RUC programs meet that need, and their long-term success will depend on how efficiently mileage data can flow from the vehicle.
Michigan’s automakers can lead this transition. By leveraging existing telematics capabilities, OEMs can lower program costs, protect driver privacy, create new business opportunities, and give states a sustainable source of revenue for critical infrastructure. Rather than simply adapting to future mandates, Michigan’s automotive industry can help define the national standard for mileage-based road funding while strengthening partnerships between automakers and public agencies.
The future of transportation funding will be built mile by mile. Michigan’s automakers can help lead the way.
Authors: Ankur Agarwal, Ph.D., Chief Executive Officer, GeoToll, Inc. and Vickie Dewey, Executive Director, GeoToll, Inc.