A new report by Transport & Environment (T&E) indicates that the corporate car market in Europe continues to fall behind in electrification compared with the private sector.

In the EU, company cars, which make up 60% of new registrations and drive double the distance of private vehicles, contribute to 74% of all new car emissions. 

Last year, battery electric vehicles (BEVs) accounted for 14.1% of corporate sales while the private market reached 15.6%, lagging for the third consecutive year.

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

Denmark exhibited the most considerable gap, where corporate BEV uptake is 26.1%, a full 27 percentage points behind the private market’s 53.1%.

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

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

The corporate car market is crucial for the sales of five of Europe’s main car manufacturers—Volvo, Volkswagen, BMW, Stellantis, and Mercedes-Benz.

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

T&E suggests that accelerating the electrification of corporate fleets could be more advantageous for European carmakers than for their competitors. 

T&E director of the electric fleets programme Stef Cornelis said: “Companies have higher purchasing power, so they should be leading on the EV transition. Instead, they lag behind households on electrification and register twice as many big cars. Meanwhile, governments are subsidising company cars with generous tax exemptions.

“The market is not delivering and existing national incentives are not strong enough to turn the company car market into the green leader it is supposed to be. This is why EU action is not only justified but also much needed.

“The European Commission needs to design the right framework to make Europe a global leader in electrification. This is where EV targets for corporate fleets come into play. This demand instrument will create predictability and provide certainty for European carmakers to continue to ramp up investments in EV and battery manufacturing.”