Don't forget about the taxation aspect - as the sales of petrol and diesel fall, so does the tax revenue.
In many countries tax represents over half of the end-user price of petrol and diesel. How will governments replace this as the revenue drops away?
I'm amazed this myth persists for those in floating currency areas.
Money doesn't stop at its first use. Instead the money is spent on something else, which is taxed.
For every $100 a government spends it will get $100 back for any positive tax rate. It's a simple geometric progression, and looks just like a stone skipping across a pond.
Do the maths and you'll see what I mean.
What stops that tax turning up instantly is that it takes time to spend the money - sometimes a long time. Which is what we generally call 'savings'.
None of that matters though in a sovereign currency area. Savings are functionally voluntary taxation - which from the other side of the balance sheet are called 'borrowing'.
Once you have the causality straight in your mind fearing running out of tax revenue is like fearing you're running out of water in the hot tub just because you've turned the pump on.
Also $200 is a pretty good deal, I pay way more than that in gas taxes each year.
In the Netherlands, extra taxes (on top of VAT) levied on fuel and vices like tobacco and alcohol put about 11 billion euros a year into the state coffers. Meanwhile, big tech companies funnel money through the country to tax havens. Uber had 50 shell companies in the Netherlands to dodge taxes on 6 billion in revenue (https://www.businessinsider.com/uber-tax-avoidance-50-dutch-...).
That depends on whether people put the money they save in a savings account, or actually spend them on other taxable goods and services. And it depends on the tax rate on fuel and electricity in that country. Fun fact, the consumer tax on electricity is much higher than that on fuel in Norway (and the fuel tax is pretty steep already here). But electricity is so cheap that it's still extremely affordable. And obviously, an EV will spend much less money on electricity, so yes, the revenue from tax on electricity will be lower.
But there's another side of the equation. Norway recently found out they could save millions on reduced ventilation requirements when building a new tunnel. It's also likely that health care costs will be reduced, although that's harder to measure.
IMO, governments should just increase other taxes if they have budget troubles due to the shift to EVs. Preferably higher taxes on the wealthy. Then we can slowly work on finding ways to tax according to actual road use. Maybe more toll roads, or maybe a tamper-proof device that measures and reports miles driven.
Talking about the money people will save could be termed somewhat off-message given that it appears EVs cost significantly more up-front than the ICE equivalent...
"Switching to an electric vehicle still has many barriers, including high upfront costs"[0]
"Expensive prices for electric cars could hold back the UK’s transition from fossil fuel vehicles, the industry has warned, amid signs that demand for electric vehicles (EVs) is waning"[1]
Over the entire lifetime of the vehicle it may be a completely different story, but how many vehicle purchasers are really planning five to ten years ahead?
[0] https://www.bbc.com/news/business-56441639 [1] https://www.theguardian.com/environment/2020/sep/04/higher-p...
Household electricity prices in 2020: https://www.statista.com/statistics/263492/electricity-price...