Corporate EV adoption in EU lags behind private households, raising concerns

In the first half of 2024, 13,8% of all new cars purchased by private households in the EU were fully electric, while only 12,4% of corporate fleet vehicles were BEVs. This gap is raising alarms for those tracking Europe’s transition to cleaner transport, as the corporate sector’s influence on the car market makes its slower uptake particularly problematic.

Trouble in key markets

The data points to a worrying trend in some of Europe’s biggest car markets — Germany, France, Italy, and Spain. In these countries, corporate EV adoption has either stalled or even declined compared to the first half of 2023.

In France, Spain, and Italy, corporate BEV registrations have dropped compared to last year, while private registrations have risen. In Germany, the corporate sector continues to lag behind the private sector, despite the withdrawal of government purchase subsidies for private EV buyers.

This sluggish growth in corporate electrification is surprising given the financial resources and tax breaks available to companies. In theory, the corporate sector should be well-positioned to lead the EV transition. However, the data suggests that this isn’t happening, which could slow down Europe’s overall shift toward electric mobility.

Poland also saw little change in corporate EV registrations between H1 2023 and H1 2024, while private purchases of electric vehicles dropped sharply. This signals a broader issue that goes beyond a few markets and highlights a disconnect between policy efforts and corporate behaviour.

Belgium shows it can be done

In contrast to most of the EU, Belgium has seen significant growth in corporate EV adoption. In the first half of 2024, 35,3% of new company cars were electric — a clear increase from last year. This is in stark contrast to the private market, where only 9% of new car registrations were BEVs.

Belgium’s success can be attributed to a significant fiscal reform. The country has phased out tax benefits for fossil fuel-powered company cars, pushing businesses to switch to electric fleets. As a result, corporate EV uptake in Belgium is now leading the transition, showing that when the right policies are in place, companies can make the shift to greener vehicles quickly and efficiently.

Companies falling short

One of the key reasons why this corporate lag is so concerning is that company cars come with significant perks. Employers often provide these vehicles to employees, and both benefit from generous tax breaks. Additionally, companies generally have more financial flexibility to invest in newer, greener technologies like EVs. Because of this, it’s widely expected that businesses would be driving the transition to electric vehicles.

But, as the new data shows, the opposite seems to be happening. Over the past few years, corporate EV adoption has consistently fallen short of expectations. This trend suggests there’s a structural problem preventing companies from embracing electrification at the scale needed to meet the EU’s climate goals.

The European commission’s role

The slow pace of corporate EV adoption poses a challenge for the European Commission’s broader climate strategy. As part of the European Green Deal, the EU has committed to drastically reducing transport emissions. Electrifying the transport sector, particularly through corporate fleets, is a crucial part of this plan.

In her political guidelines, European Commission President Ursula von der Leyen reaffirmed the EU’s commitment to the Green Deal, which includes a phaseout of internal combustion engines by 2035. However, the lack of progress in corporate EV adoption shows that market forces alone may not be enough to achieve this transition.

Many experts now believe the European Commission should intervene by setting stricter EV adoption targets for businesses, especially large corporations. Stef Cornelis, Fleets Director at Transport & Environment (T&E), argues that the EU needs to set clear expectations for companies to drive demand for electric vehicles. “We should be asking large companies in Europe to only purchase or lease electric cars by 2030,” Cornelis said. “It’s feasible, and it would create the clarity we need to boost the EV market.”

Policy change needed

The Dataforce data has brought to light a key issue in Europe’s transition to green transport: while private buyers are gradually shifting toward electric cars, the corporate sector is falling behind. Given the influence corporate fleets have on the overall car market, this slow progress could be a significant roadblock in achieving the EU’s climate goals.

Belgium’s experience shows that policy changes, particularly around tax incentives, can make a real difference. However, as long as major markets like Germany, France, Italy, and Spain continue to lag, the broader shift toward electric vehicles in the EU will remain sluggish.

To avoid further delays in corporate fleet electrification, many believe that stronger EU-wide measures are necessary. This could involve setting mandatory EV targets for companies or reevaluating the tax advantages that currently make it easier for businesses to stick with traditional, fossil fuel-powered cars.

Conclusion

As Europe continues its push towards greener transport, the corporate sector’s role is increasingly under the spotlight. While private households are steadily adopting electric vehicles, the slow progress in corporate EV uptake raises serious concerns. Without swift and targeted policy interventions, the EU risks missing its climate targets, with corporate fleets remaining a significant part of the problem.

For now, Belgium stands as a successful example of how fiscal reforms can spur businesses to go green. But with much of the rest of Europe lagging behind, there is a growing call for the European Commission to take stronger action to ensure companies play their part in the shift to electric mobility. The next few years will be critical in determining whether Europe’s corporate sector can step up — or if it will continue to trail behind in the race for a greener future.

Source: Transport & Environment