The UK’s fleets are performing well on electrification but some worrying trends are emerging in high PHEV and SUV sales
Corporate fleets in the UK are performing comparatively well in terms of electrification compared to their peers in Europe. Rates of battery electric vehicle registrations have the UK ranked as the 8th best in Europe and the 4th best in western Europe.
Out of all corporate registrations in 2023, 22% were a BEV, exactly in line with the targets set out in the ZEV mandate. In fact the corporate channel was responsible for 75% of all BEV sales in the UK. With corporate sales making up 57% of all new car registrations in the UK, this sector will be vital to the transition to electric vehicles. The success is largely due to the beneficial tax rates (otherwise known as benefit-in-kind) applied to BEVs purchased in the corporate channel.
Company cars also compose a significant majority of road emissions as they tend to drive 2.5 times the distance of privately-owned vehicles. They also have relatively short ownership periods of three to five years.This means the cars quickly make their way to the second hand market where 79% of people bought their cars in 2023. So no only do corporate cars have an important role to play in their own decarbonisation but also the decarbonisation of the second hand market.
Maintaining the tax differential between BEVs and petrol and diesel cars beyond 2027/28 and changing depreciation rules or introducing higher vehicle excise duty for non-ZEV corporate cars boost BEV uptake across the whole corporate market.
Plug-in hybrid sales and SUV sales were also strong in the sector however. Corporate sales of PHEVs accounted for 75% of all PHEV sales in 2023 and 62% of all corporate registrations were SUVs. This is worrying as PHEVs have been found to emit 3.5 times more than emissions testing suggests and SUVs are bigger so pollute more and pose safety risks to other road users.
Regrading benefit-in-kind rates for PHEVs beyond 2028 to reflect their real world emissions is essential as is the taxation of BEV company cars after 2030 that factors in weight or efficiency to both ensure taxation matches pollution and to encourage smaller, more affordable cars to enter the corporate channel.
