Greening corporate fleets: an industrial and social policy for Europe

With the new CO2 emission standards for cars, vans, and trucks set in stone, Europe’s automotive industry is on a pathway towards 100% zero-emission vehicles (ZEV). Creating strong demand over the coming years across the Union will be key in making this transition successful. In February 2024, the European Commission opened a public consultation on Greening Corporate Fleets and if the EU should set mandatory ZEV targets for this market. Large fleets present a huge opportunity to boost demand for made-in-EU ZEVs, generate investments in the EU’s battery supply chain, and accelerate the much needed emission cuts in the transport sector in a socially fair manner.

Today 60% of new cars are registered by companies, of which the majority are owned by large corporations. Also most new vans and trucks are purchased by big fleets. Large companies - who have better access to capital and benefit from corporate tax breaks - should lead Europe’s transition to zero-emission transport.

But, looking at cars, companies are actually lagging behind the private market in the shift to ZEVs. Current national incentives are clearly not sufficient to make the corporate car market the ZEV leader it is supposed to be. Especially in the two biggest markets, Germany and France, companies are not doing their fair share hereby putting the costs of the transition on households.

While still a nascent market, we see a risk for a two-speed Europe on zero-emission truck uptake. In 2023, Germany and the Netherlands alone accounted for 60% of all ZE truck sales, despite representing only 30% of new registrations. A well-functioning internal market is indispensable to incentivise investment and innovation in Europe. In order to accelerate electrification of large corporate fleets across the whole EU, binding ZEV targets on the largest fleets are necessary.

Regulate smartly, generate many benefits

Setting binding EU fleet targets can be done in a simple and straightforward way by focusing on the very biggest players: companies with more than 100 cars (incl. leasing) represent 34% of all new registrations. For vans, large corporate fleets make up only 5% of companies, while accounting for 40% of all new sales. Looking at trucks, large fleets represent 21% of companies while owning 74% of new vehicles.

Our analysis in this briefing shows that EU electrification targets for large fleets can bring the following benefits:

● Boost uptake of ZEVs: ZEV uptake would increase to 72% for cars by 2030. Depending on the fleet sizes included in the scope, ZEV uptake could increase up to 63% for vans (by 2030) and up to 74% for trucks (by 2035). EU fleet targets would create investment certainty for car, van, and truck manufacturers to scale up production and supply chains, whilst supporting them in implementation, i.e. meeting their CO2 standards.

● Cut road transport emissions: road transport emissions will be reduced significantly, with fleet targets delivering up to 14% (2030) and 24% (2040) of the required additional savings that are necessary to meet the EU climate targets. Without new measures, the bloc and its member states are currently off track for their legally binding 2030 targets under the Effort Sharing Regulation (ESR), and far off from a new economy-wide -90% net target for 2040.

● Increase uptake of affordable ZEVs: accelerating electrification of large fleets can bring 8.2 million additional affordable ZEVs on the used car market by 2035. It will also benefit smaller freight companies, as larger fleets will absorb some of the initially higher purchase costs of zero-emission vans and trucks.

Policy recommendations

The Greening Corporate Fleets public consultation should only be a first step. Given its large potential, the next European Commission should, as part of its Political Guidelines, commit to presenting a Corporate Fleets Regulation within the first 100 days of its new mandate. This regulation could be proposed as a replacement of the Clean Vehicles Directive (CVD).

This Corporate Fleets Regulation should be simple and effective:
● Cars and vans: set binding 100% zero-emission purchase targets by 2030 for large car fleets (as of 100 vehicles, including leasing companies) and large van fleets. This should be combined with a fleet target, requiring fleets to make their entire stock zero emission by 2035.

● Trucks and coaches: set binding stock targets requiring big truck and coach fleets to largely replace their existing fleets with zero-emission vehicles by 2040 (e.g. 90% ZEV stock target). To help fleets ramp-up ZEV ownership, an intermediate 100% ZEV purchase target should be introduced by 2035, with some flexibility for companies to choose their own ramp-up pace.

● Extend the scope to big shippers and freight forwarders (vans and trucks): the binding ZEV targets should also apply to companies that operate or contract vehicles, if their turnover surpasses €50 million. Mostly relying on subcontractors to move their goods, these big players should help carriers in their transition.

● Promote made-in-EU: include a made-in-Europe clause requiring member states to exclude non-EU made ZEVs from corporate tax breaks and other incentives for zero-emission corporate vehicles (as done in the Net-Zero Industry Act). This should kick-in when a specific non-EU country accounts for a certain percentage of EU sales and provided that the price difference is not more than a certain threshold.