In Europe, the company car market is a lot bigger than in the USA. What the market is in China, I honestly do not know, so this article is for our European and North American readers.
For historical reasons, good or bad, there is a huge company car market in Europe. The most abundant company car is not a vehicle one drives professionally to do the company’s business. It is a private car made available by the employer for private use by the employee, both as an incentive to work (and keep working) for the company and as a tax dodge. It is a high-value reward that is taxed as a Benefit in Kind (BiK) at a relatively low income tax level. It functions as a way to bind the employee to the company with golden chains, much like health insurance is used in the USA as an employee-binding instrument. Discussions about the rationale and ethics of this practice are outside the scope of this article.
A press release from AVERE triggered me to share my thoughts on using this market to accelerate the transition to fully electric driving. This press release was made because the EU commission put regulating the company car market on its to-do list. It was a followup on suggestions made during the Conference on the Future of Europe.
The BiK company car market is an excellent target to accelerate the transition to electric vehicles. The costs and risks are spread across the leasing company, the employer, and the beneficiary that gets the use of the car for a few years. It is also the main source for young used cars.
About 63% of new passenger car sales in the EU are company cars. And these company cars drive 2.25 times as many miles as private cars. A number of countries are discussing whether to make all new company cars 100% zero emission (ZE) by 2026 or 2027. This concerns primarily BiK company cars, but can also encompass parts of the light commercial vehicle fleet.
Regulations to push this market to 100% zero emission will meet less resistance than any mandate that touches individuals’ freedom of choice. Nobody is forced to drive a company car — you are free to buy your own car. It is just that a private car will be more expensive, likely a used car instead of a new car, and absolutely less luxurious unless you are willing to spend a ton of money.
Going zero emission with company cars is also good for the image of the driver, the employer, and the leasing company, which is an excellent route to accelerate the adaptation of electric driving.
Attractive BiK tax schemes for cleaner and alternate fuel vehicles were a large driver for the growing sales of electric cars in many European countries. The yearly lowering of the incentives caused the infamous end-of-year spikes in Dutch EV sales.
The EU creating a framework to push member states to implement incentives or mandates to push the corporate car market to zero emission would be great. Many governments afraid of opposition from fossil fuel interests, car lovers, luddites, or just people opposed to change can use the EU as a fig leaf to hide behind when introducing these regulations.
There are two types of EU “laws” — regulations and directives. A regulation is an EU-wide mandate that supersedes national laws. Once adopted by the EU, it is the same in all EU member states. A directive is an order to the member countries to implement the directive in their national laws. It will be slightly different in each member state, with different enforcement and different starting dates.
There are often member states which implement the directive too late, only partially, or not at all. The time needed for implementation of a directive is at least twice the time needed for a regulation. After going through the EU legislative process, the process is repeated 27 times in all the member states.
Making all the company cars fully electric should be an EU regulation. It is the only way to get something with a starting date in the second half of this decade, with 2030 as the latest sensible date. An EU directive would be too little too late.
I would be happy with a target date of 2028, and a late date of 2030 for countries that can make a good case why 2028 is too early for them. There also should be encouragement/dispensation for countries that prefer an earlier date. Reaching a country’s climate goals can be an overriding argument to implement a mandate for company cars sooner.
The Netherlands government is working on a proposal to make 100% of new company cars BEV in 2025. This is an acceleration by a year of previous plans in reaction to the fossil fuel crises caused by Russian’s war against Ukraine.
In Belgium, they decided against a mandate for 2026, but are aiming for taxes on fossil fuel company cars that will have the same result.
The intentions of other European governments are hard to find. If published, it is in national media in their national language, and likely not on the front page. Anybody knowing of such intentions, please share in the comments section.
One of Europe’s largest leasing companies managing the corporate BiK fleets, LeasePlan, has 2030 as a goal to have a 100% zero-emission fleet, both passenger vehicles and light commercial vehicles. I fully expect it to reach that goal, at least in the United Kingdom, the Netherlands, and Belgium. Likely all companies in this industry would like to help their clients to transition to renewable energy fleets, both for their clients’ bottom lines and public image.
There are different types of company cars. They should be treated on their own merits.
Private cars for employees made available as benefit in kind, the infamous “lease cars,” the envy of neighbors and family. These are the bulk of company cars. When I was still part of that club, around me contracts were often 3 years or 120,000 km, or 4 years and a bit more kilometers. In both cases, it was whatever came first. These cars are the young, high-quality cars in the used car market. Making these cars fully electric is the most important to push the transition.
Rental fleets, both PC and LCV. These should be forced to go ZE sooner. From a regulatory point of view, these are the easiest. There is a high turnover and the customers are not very critical. Many companies pride themselves on having fleets not older than half a year. But to make this group fully electric, a mandate is needed. Competition from fossil fuel cars would otherwise be too big for many rental companies to switch.
Taxicabs, including Uber-like services. This is the lowest hanging fruit. No excuse to give new licenses to fossil fuel vehicles for taxi services after 2024. Perhaps a year later for Central Europe. Large metropolitan areas should be earlier than 2024 to reduce local air pollution. These early dates are not fit for EU regulation. In the regulation, a “not later than” date should be specified.
Logistics, postal, and packet delivery vans and trucks. These are both the company fleets and the vehicles of the self-employed, offering the flexibility that the Amazons of this world need. It is called last-mile delivery, but it is often far more than a mile from the distribution location. Looking at the current capacities of vans, this market is what OEMs are aiming for with their electric LCVs, at least the high-volume, short-distance part of this market. When I ordered a flatscreen TV recently, the distribution center was over 150 km (100 miles) away. That is too much for a round trip with an electric van.
The last main category are vans of the labor force offering work and service on location. These are tool sheds on wheels. It is what pickup trucks are often used for in the USA. Many of these professionals are specialists. Even in a densely populated country such as the Netherlands, their service region can have a radius of over 200 km (150 miles). They need the capacity to tow larger equipment or materials. The OEMs have some homework to do to make their lineup of ZE light commercial vehicles attractive for these use cases. The current vans are too expensive and can’t do the job for many businesses.
And as a special category from Germany, we have the “Jahreswagen.” Many employees and retired employees at the main OEMs can buy a new car once a year with a (large) discount. Selling these cars for a price between what is paid and the full list price creates nice extra income. Now the name is for all used cars that are less than 1 year old. Making German carmakers sell only BEVs to their employees would increase the supply on the used car market fast.
It is clear why it would be beneficial to have an EU regulation that makes all new company cars fully electric as soon as reasonably possible.
For the EU, this regulation would apply to 2/3 of passenger vehicle sales and nearly 100% of light commercial vehicle sales by 2030. That is about 12 million BEVs. It would set an example for private passenger vehicle sales, pushing those up. For the total EU market, this could make the fully electric market above 90% and perhaps above 95% of the total light vehicle market.
I can hear carmakers complain that they don’t have that production capacity. Well, they have 3–4 years to build that production capacity for the early adopters and another 3–4 years for the rest of the EU market. This is in line with the intention of many brands.
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Source: Clean Technica