Corporate fleets lagging behind in EV adoption

In the push towards a greener future, the transition to electric vehicles (EVs) is paramount. However, despite significant strides in the consumer market, there's a crucial sector where progress is lagging: corporate fleets.
A bar chart comparing BEV (Battery Electric Vehicle) share in corporate and private sectors across various EU countries in 2023. Blue bars represent corporate share, while orange bars illustrate the private market. Source: Transport & Environment, EV Markets Reports.

Transport & Environment (T&E) reports that in the European Union (EU), the corporate segment accounts for a staggering 60% of car sales, making it a pivotal player in accelerating electrification efforts. With purchase decisions heavily influenced by total cost of ownership (TCO), corporate fleets present an ideal scenario for widespread EV adoption. These vehicles typically cover double the mileage of private cars, meaning the switch to electric could yield substantial CO2 and monetary savings.

Yet, despite the potential benefits, corporate fleets in Europe are falling short in leading the charge towards electric mobility. In 2023, only 14% of battery electric vehicle (BEV) sales occurred in the corporate segment, barely edging out the 15% seen in private sales. This disparity is largely attributed to ineffective national taxation policies that fail to incentivise companies to embrace BEVs over internal combustion engine vehicles (ICEs).

The lobbying efforts of car manufacturers, particularly in countries like Germany, have hindered progress by opposing reforms that would increase taxes on fossil fuel cars, thereby making BEVs more appealing. Currently, only 16 out of 25 EU countries, along with the UK, have established company car taxation policies that promote BEV adoption. These policies have resulted in a higher BEV market share within the corporate segment compared to private sales in some regions, but major automotive markets like France, Germany, Italy, and Spain remain notably absent from this list.

Belgium stands out as a success story, achieving a high share of corporate BEV registrations through differentiated taxation that favours EVs. By basing benefit-in-kind taxation on CO2 emissions, BEVs are taxed less than ICE cars, while depreciation allowances further tilt the scales in favour of electric mobility. Slovenia leads in Central and Eastern Europe, offering VAT recovery and significant tax reductions for zero-emission corporate vehicles.

T&E’s modelling suggests that achieving a 50% higher BEV market share in the corporate segment compared to private sales is feasible with effective policies in place. Such a scenario would substantially boost overall BEV market share, potentially reaching 22% by 2023.

The failure to implement regulations mandating corporate BEV sales targets, coupled with inadequate taxation systems, is stifling the growth of electric mobility. To bridge the gap and accelerate the transition to sustainable transportation, policymakers must prioritise incentivising electric vehicle adoption within corporate fleets. Only then can we realise the full potential of EVs in mitigating climate change and creating a cleaner, greener future for all.

Source: Transport & Environment

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