June 22, 2024

Europe’s Corporate Car Electrification Trails Private Sector Adoption

A recent report by Transport & Environment (T&E) reveals that the corporate car market in Europe is lagging in electrification compared to the private sector.

Within the EU, company cars, accounting for 60% of new registrations and driving double the distance of private vehicles, contribute to 74% of all new car emissions. 

The adoption of battery electric vehicles (BEVs) in the corporate sector was 14.1% last year, slightly behind the private market which reached 15.6%, marking the third consecutive year of lagging.

Germany and France, two major car markets in the EU, show disparities in corporate BEV uptake compared to the private sector, with Germany at 16.3% versus 25.6% in the private sector, and France at 12% versus 22.1%.

Denmark displayed the largest gap, with corporate BEV uptake at 26.1%, significantly behind the private market’s 53.1%.

Furthermore, companies registered twice as many large cars as private households last year, with Germany representing 40% of all heavy cars registered in the EU.

Plug-in hybrid cars (PHEVs), known to emit as much pollution as petrol cars, are primarily registered by companies, with 77% of all new PHEVs in 2023 being in the corporate channel.

The corporate car market plays a crucial role for five of Europe’s major car manufacturers—Volvo, Volkswagen, BMW, Stellantis, and Mercedes-Benz.

Company car drivers tend to prefer European electric cars, with 76% of zero-emission corporate cars sold by European manufacturers, compared to 65% in the private market.

T&E proposes that expediting the electrification of corporate fleets could benefit European carmakers more than their competitors. 

T&E’s director of the electric fleets programme, Stef Cornelis, stated: “Companies have greater purchasing power, so they should be at the forefront of the EV transition. However, they are falling behind households in electrification and registering twice as many large cars. Meanwhile, governments are granting generous tax exemptions for company cars.

“The market is not meeting expectations, and current national incentives are insufficient to transform the company car market into the environmentally friendly leader it should be. This is why EU action is not only justified but also urgently needed.

“The European Commission must establish the appropriate framework to position Europe as a global leader in electrification. Implementing EV targets for corporate fleets is key. This demand instrument will provide certainty and predictability for European carmakers to increase investments in EV and battery manufacturing.”

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