EU Set to Recommend Company Cars Take the Lead in EV Shift

(Bloomberg) -- The European Union will put forward a set of solutions to try and arrest the slump in demand for electric vehicles by incentivizing sales in the continent’s dominant corporate car market.

The European Commission, the bloc’s executive branch, will recommend that member states overhaul their tax regimes so that companies choose to buy EVs for their employees instead of traditional combustion engine vehicles, according to a draft document seen by Bloomberg News. The recommendations will come alongside the bloc’s plan this week to ensure Europe’s automakers survive amid the green transition and stiff global competition.

While the EU has put in place ambitious targets for carmakers to go green so that after 2035 only zero-emissions autos will be able to be sold on the continent, measures to boost consumer demand have lagged. Last year saw EV sales in Europe fall as countries such as Germany withdrew subsidies and the broader car market struggled.

Corporate fleets make up two thirds of Europe’s auto market and domestic carmakers are generally favored, so boosting demand there is seen as a relatively quick fix to boost the sector. Belgium, which changed its fiscal incentive scheme to favor EVs, has seen a huge pick-up in demand, so that the small Western EU nation is now the third biggest market for new sales.

“Changing these fiscal regimes can have a quick and decisive role in the transition to zero-emissions vehicles in corporate fleets,” said the draft document, which is still subject to change before publication. “Corporate fleets are at the heart of this transition.”

The draft highlights other steps member states could take — including boosting EV uptake by rental companies at airports, which would also serve to give consumers a first try of the technology and potentially influence them to change their vehicle at home. The commission will propose legislative measures to boost the corporate sector later this year.

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