16 May 23

EC under pressure to make all new company cars electric from 2030

Fleets and Transport & Environment call for European Commission's Greening Corporate Fleets plan to set binding target for all new company cars to be battery electric from 2030.

As the European Commission prepares to unveil its Greening Corporate Fleets initiative in the third quarter of 2023, Transport & Environment has modelled the positive green impact of setting a binding target for all new corporate cars to be battery electric by 2030.

Details on the Commission’s plans are scarce, beyond the intentions that it declared in its 2020 Sustainable and Smart Mobility Strategy to propose actions that would boost the uptake of zero-emission vehicles in corporate fleets.

However, the Commission did go further in its RePowerEU strategy, in the wake of the energy crisis caused by Russia’s invasion of Ukraine, stating that it would: “Consider a legislative initiative to increase the share of zero-emission vehicles in public and corporate car fleets above a certain size.”

Fleet support

Major fleets, including IKEA, Coca-Cola, AstraZeneca, an post, SAP, Tesco and Unilever, have called on the Commission to set a deadline of 2030 for all new company cars and vans to be electric.

T&E calculates that corporate fleets account for 58% of new car sales in Europe, and account for 74% of carbon emissions due to the higher annual mileages of company car drivers. As a result, electrifying corporate cars would accelerate Europe’s electrification programme and save greenhouse gas emissions.

Fleets slow to electrify

However, the fleet market currently lags behind the private market in the uptake of pure electric vehicles, according to T&E. It cites Dataforce figures that show only 10.8% of new corporate cars were pure battery electric last year, compared to 14.5% in the retail sector.

Figures from major leasing companies that suggest about 30% of new orders and deliveries are electric include pure battery electric, as well as plug-in hybrid vehicles, which T&E claims produce five times more emissions than their official WLTP scores, due to their short range and poor driver discipline in recharging the batteries for zero emission motoring. According to T&E, 71% of new PHEVs are sold into corporate channels as businesses and drivers select more tax-friendly lower emission cars.

Advantages of 2030 mandate

Mandating targets for all new corporate cars to be 100% zero emission by 2030 would add 11 million extra EVs to Europe’s roads and save an additional 30 million tonnes of CO2e for the year 2030.

Moreover, a binding target would guarantee future EV demand for OEMs as they invest in production facilities for electric cars. And it would increase the supply of EVs into the secondhand market, creating a wider selection of affordable used EVs for used car buyers.

Stef Cornelis, T&E’s director of the electric fleets programme, said: "The fact that corporate cars are lagging behind in the switch to battery electric cars is just unacceptable. Companies should be leading the switch to e-mobility. They benefit from generous car taxation cuts and have the financial resources to do so. The European Commission has an opportunity to reverse this trend by setting binding electrification targets for company cars. This would supercharge the uptake of electric cars in Europe and can bring up to 12 million more clean vehicles to the second hand market, making clean and affordable mobility accessible to many more EU citizens."

50% target for 2027

T&E also wants the Commission to set an interim target of 50% of all new corporate cars to be zero emission by 2027, and says all targets must be legislative, not voluntary.

Opposition to 2030 target

However, the International Road Transport Union (IRU) which represents the EU road passenger and goods transport industry with a focus on commercial vehicles, argues that the imposition of a mandate on private companies to purchase zero emission vehicles would be both disproportionate and unsuitable, as well as disregarding EU law. The choice to use private capital for fulfilling goals should always remain with the private company and its subsidiaries, it said.

Any procurement mandate would lead to greater inequality between companies that can afford to purchase more expensive vehicles, and small and medium-sized enterprises for which this will be a barrier to conducting business.

Instead, the IRU urges the European Commission to propose that EU Member States deploy government incentives to facilitate the adoption of carbon-neutral technology, including financial incentives for the uptake of zero-emission vehicles (ZEVs); and supporting and incentivising the long-term use hydrogen fuel cell, battery electric and carbon-neutral fuels for heavy-duty vehicles.

“Commercial road transport operators should have the freedom to purchase the vehicles that best suit their business models, and it is up to manufacturers to make such vehicles attractive and competitive,” said the IRU.

Image: Shutterstock

Authored by: Jonathan Manning