Europe must democratise the electric car for the 80%

Europe must democratise the electric car for the 80%

EURACTIV — 2023-11-09

News from Brussels

Less than a month ago, Executive Vice-President Šefčovič and Commissioner Wopke Hoekstra  committed to a minus 90% emissions cut by 2040. Transport is the key to achieving this goal as by 2030 it could account for 45% of the EU’s total emissions. 

The mobility sector profoundly impacts Europeans’ everyday lives. Most EU citizens rely on cars and need access to affordable emissions free mobility if we want to hit our climate goals.

The EU just agreed to the end of the combustion engine by 2035. This is the right way forward for people as electric cars will not only cut transport emissions but also reduce their bills. 

Now Europe needs to do more to make electric cars affordable and accessible to all. If the EU does not step up, we will lose people’s support for the Green Deal. 

Electrifying company cars and the leasing channel is a unique opportunity to both accelerate and democratise the electrification of personal mobility. 

Today half of all new cars are leased and the majority of these are company cars. The top seven leasing companies – all owned by banks or carmakers – own a fleet of almost 10 m cars in the EU. 

Not one one of them has committed to phase out fossil fuel cars, their electrification targets are weak and the uptake of battery electric cars are merely in line with the overall market. 

But if the top seven companies and the leasing sector overall electrified their fleets, it would cut transport emissions of new cars by an additional 26% by 2035. Hitting the 2040 target without action on corporate fleets is near impossible. 

Secondly, 80% of EU citizens buy used and not new cars. The type of cars that are leased today as company cars, determine what second hand cars will be available in 3-4 years’ time. 

So to make EVs accessible and affordable we need to electrify the leasing market as soon as possible. Company car drivers would carry the higher upfront costs while private households will benefit from more affordable second hand electric cars. 

This is only fair. Company cars are heavily subsidised through tax cuts costing EU taxpayers almost €27 bn every year.

Leasing companies are registering record profits year after year, with margins of up to 50%. They have the means to go electric but aren’t moving fast enough.

For too long, the leasing sector – and company cars overall – have been overlooked by the Berlaymont. Contrary to many other sectors, car leasing companies are not required to make any climate efforts – which probably explains why they are making little progress. 

The good news is that Maros Šefčovič and Wopke Hoekstra promised the EU Parliament they would take action on corporate fleets. This should not be an afterthought but the very foundation of car electrification policies going forward.

This opinion piece does not necessarily reflect the views of ECG