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The corporate cars problem and what Europe can do about it

May 16, 2023

Modelling the impact of the EU Greening Corporate Fleets Initiative

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Corporate fleets are Europe’s biggest car market. They account for 58% of new sales and – given their high mileage – are responsible for 74% of emissions of new cars. Electrifying corporate cars would rapidly accelerate electrification and transport emission savings in Europe. The latter is crucial given that the EU and Member States have recently increased the ambition of the Effort Sharing Regulation, setting binding 2030 targets for road transport, heating, agriculture, small industrial installations and waste.

But Europe is currently missing out on this big opportunity. The EU’s largest automotive market is lagging behind on electrification. In 2022, 10.8% of new corporate cars were battery electric vehicles (BEV) compared to 14.5% for the private market, and this gap is only growing.

The upcoming Greening corporate fleets initiative – announced by the European Commission (EC) in its 2023 Work Programme – is the opportunity for the EU to reverse this trend.

Looking at five different scenarios and policy options, this report analyses the impact EU action on fleets can have. Our analysis shows that setting binding targets for all new corporate cars to be battery electric by 2030 (the most ambitious policy scenario) would deliver the following benefits:

CO2 emissions cuts:

Emissions of cars are reduced by an additional 30MtCO2e for the year 2030. Cumulative this is 83 MtCO2e more compared to current EU policies. The fleet targets would as such reduce the ESR emissions gap already by 37%, showing that EU action on fleets is crucial for the EU and Member States to meet their increased ESR targets.

Accelerate the uptake of electric cars:

11 million additional battery electric cars will be on our roads by 2030, replacing polluting diesel and petrol cars. A binding EU fleet target will guarantee continuous growing demand for BEVs and as such support European OEMs in their transition to become electric carmakers and the goals of the EU Green Industrial Plan to bring e-car and battery production to Europe.

Faster supply of affordable second-hand electric cars:

Today almost 8 out of 10 EU citizens buy their car second-hand. Given their much shorter ownership period (three to four years), electrifying corporate cars can rapidly accelerate the supply of affordable second-hand BEVs. A binding EU fleet target will bring 12.5 million additional second -hand BEVs onto the market by 2035.

Oil import savings:

Oil imports are further reduced by an additional 208 million barrels of oil by 2030 and 1,029 million by 2040. EU fleet targets will therefore bring a big contribution to the EU’s efforts to increase energy security and become less dependent on oil imports.

What should the European Commission do?

It is unacceptable that corporations are behind in the transition to zero-emission mobility. Corporates and leasing companies have the financial resources to carry higher upfront costs and are benefiting from big tax benefits in most – if not all – EU countries. Our analysis shows that setting binding zero-emission targets for fleets as part of the Greening corporate fleets initiative can reverse this trend while at the same deliver benefits for EU citizens, the automotive industry and the EU’s energy security goals. 

The most ambitious scenario (i.e. 100% of all new corporate cars are zero-emission by 2030, and 50% by 2027) clearly delivers the biggest benefits, not only for 2030 but even increasing after.

Therefore as part of the upcoming Greening corporate fleets initiative, the European Commission should propose the following:

  • Binding zero-emission targets for all new corporate cars. Experience to date has taught us that voluntary targets do not work;
  • By 2030, all new corporate cars have to be zero-emission. This trajectory is in line with the commitments of European carmakers;
  • By 2027, 50% of all new corporate cars have to be zero-emission. This interim target is crucial to guarantee a continuous uptake of zero-emission cars.