The European Commission plans to accelerate the adoption of electric vehicles (EVs) in corporate fleets by phasing out tax breaks for petrol and diesel-powered company cars, according to a draft document set to be published on Wednesday.
The EU executive will outline its auto industry action plan following discussions with sector leaders, aiming to help European automakers transition to electrification and remain competitive against more advanced U.S. and Chinese manufacturers.
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While European carmakers continue to introduce new EV models, consumer demand has remained sluggish. The market share of EVs in Europe declined to 13.6% in 2024, down by a percentage point from the previous year, though it rebounded slightly to 15% in January, according to the European Automobile Manufacturers Association (ACEA).
“To ensure an adequate uptake of zero-emission vehicles in corporate fleets, eliminating distorting subsidies for fossil-fuelled vehicles is instrumental,” the draft paper, seen by Reuters, stated. It also noted that corporate fleets account for about 60% of new car registrations in the EU.
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The Commission intends to introduce legislation by the end of the year aimed at decarbonizing corporate fleets and boosting demand for EVs. Additionally, it will issue recommendations to national, regional, and municipal authorities on measures to accelerate electric vehicle adoption.
ACEA has pointed to the lack of charging infrastructure as a significant barrier to EV uptake, noting that nearly 60% of charging stations are concentrated in just three countries. The abrupt termination of EV subsidies in Germany and the limited availability of affordable electric models have also contributed to weaker demand.