Europe's Bold Move: Electrifying Corporate Fleets

The European Commission plans to enhance electric vehicle adoption in corporate fleets by ending tax breaks for petrol or diesel company cars. The upcoming legislation aims to boost demand for EVs amid competition from U.S. and Chinese markets and limited charging infrastructure.

The European Commission is poised to unveil a groundbreaking initiative designed to stimulate demand for electric vehicles in corporate fleets, a crucial sector that currently constitutes 60% of new car registrations within the EU. This move comes amidst growing competition from the U.S. and China and aims to curb the reliance on fossil fuels.

The Commission's draft paper, scheduled for publication on Wednesday, suggests putting an end to tax incentives for petrol and diesel company cars as part of a broader strategy to decarbonize corporate fleet operations. The past month has involved discussions with industry leaders to ensure EU automakers can make the necessary transition to more sustainable vehicle options.

According to data from automaker association ACEA, while the market share for electric vehicles in Europe saw a slight uptick to 15% by January, it had earlier decreased to 13.6% in 2024. Challenges have included inadequate charging stations, predominantly concentrated in three countries, and a reduced variety of affordable EV options, which the Commission seeks to address through fresh legislative proposals by year-end.

(With inputs from agencies.)