Federal and state fuel taxes account for the largest share of the Texas State Highway Fund at 48 percent and 29 percent, respectively, in Fiscal Year 2015. These taxes are levied on a pergallon basis, meaning that as vehicles get more fuel efficient, they return less and less revenue for every mile driven. This is problematic from a funding standpoint because passenger and commercial vehicles are expected to continue increasing in terms of their fuel efficiency. It is therefore important for Texas to be aware of trends in the alternative fuel vehicle (AFV) industry and their potential impact on fuel consumption and associated fuel tax revenue generation. This report provides a summary of recent trends in the development of alternative fuel technologies and factors impacting their adoption; potential revenue impacts to the State of Texas;and concludes with summary information and discussion on federal, state, and local incentives aimed at encouraging alternative vehicle technology development, deployment, and adoption.