April 18. 2024. 12:50

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Electrifying corporate cars is smart green industrial and social policy

To reach the EU’s carbon reduction targets whilst boosting industry, the electrification of corporate fleets should become a cornerstone of Europe’s Green Industrial Plan, writes Stef Cornelis.

With European elections taking place in spring of next year, this European Commission is entering its final phase. For the remaining year, the future and greening of Europe’s industry has become a key priority.

Last month, Commission President Ursula von der Leyen presented Europe’s Green Industrial Plan. The Commission wants the bloc to become a green tech leader and accelerate the manufacturing of clean technologies in the EU.

The strategic objectives of this initiative are threefold: become less dependent on energy imports, create the jobs of the future in Europe, and meet the EU’s climate targets.

Electric cars, specifically accelerating domestic production of batteries and their components, are a key priority of this industrial plan.

If Europe’s automotive sector is to compete with the US and China, electric vehicles have to become a Made in Europe product.

Not only is the automotive sector one of the continent’s largest employers, but road transport is also Europe’s top oil consumer and one of its biggest polluters.

In order for this green industrial strategy to succeed, the Commission needs to complement its strategic objectives with concrete policies that further drive the demand for electric cars in Europe. Corporate cars will be critical to this becoming a reality.

Corporate cars: Europe’s biggest market but lagging on electrification

Today, six out of ten new cars in the EU are purchased by corporate entities (rather than private households). Electrifying this market segment would create a guaranteed demand for electric vehicles and batteries.

At the same time, corporate fleet electrification is an important support instrument for European carmakers in their transition towards electric.

European OEMs have a strong presence in this market, accounting for almost 80% of the new corporate registrations.

Electrifying corporate fleets would greatly push major European brands like VW, Stellantis Group and Renault – who have committed to 80% or even 100% electric by 2030 – in successfully meeting their electrification goals.

Greening corporate fleets is also a social policy. Today, almost eight out of ten Europeans buy their car second-hand.

Corporate cars are held for only three to four years – compared to eight to ten years for private cars – before they are sold onto the second-hand market. By electrifying the corporate fleet, more affordable second-hand BEVs will enter the market, making them accessible to many European households.

Europe is currently missing out on this big opportunity. Contrary to common perception, the corporate sector is not a leader in transitioning to battery electric.

In 2022, 15% of new private cars in the EU were battery-electric. For the corporate sector, it was 11%. The gap between the two markets is even increasing.

What should President von der Leyen do next?

After the summer, the European Commission will come forward with its Greening Corporate Fleets Initiative.

As part of this, the Commission should set binding targets for all new corporate cars to be fully electric by 2030 at the very latest.

The importance of this market for Europe’s green and industrial future cannot be underestimated, and this sector needs a push.

Voluntary commitments will not work. T&E’s latest analysis in France shows that 66% of companies are not meeting the voluntary fleet electrification targets set by the Macron government.

And big European companies are urging action.

Last month, a coalition of 30 companies, including IKEA, Unilever and Vattenfall – all of which have big fleets – asked President von der Leyen to set a binding 2030 fleet electrification target. This, they say, will make Europe a clean transport leader.

Can von der Leyen hit two birds with one stone? Electrifying company cars can deliver both industrial and social wins to the departing Commission.

Why miss out on this opportunity to end the Green Deal term on a high note?