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The European Commission plans to force the electrification of the rental and company car markets by 2030 in a move industry executives have criticised as “a backdoor ban” on petrol cars.
The proposal for a quota on large businesses to buy mostly EVs is expected to be made at the same time as Brussels plans to loosen the 2035 ban on the internal combustion engine on December 10, according to two people with knowledge of the discussions.
“This quota [on corporate fleets] would actually lead to a far earlier ban of combustion engine vehicles,” Nico Gabriel, chief operating officer at German rental car company Sixt, said. “There seems to be some kind of a double sword play.”
“This is a backdoor petrol ban,” said an official at a leading carmaker.
European Commission president Ursula von der Leyen made greening of corporate fleets a key part of her agenda for her second term after she was re-elected last year.
Discussions are fluid and there could be last minute changes with the industry and several member states calling for the proposal’s withdrawal, the people said.
In a letter to Von der Leyen on Friday, Chancellor Friedrich Merz said Germany would “reject a blanket legal quota” on corporate fleets and called on Brussels to scrap its 2035 petrol ban.
Instead of a single EU target, Brussels is also considering imposing quotas on a national level, giving some flexibility to member states, one of the people added. The quota could be voluntary or recommended targets to keep member states onside, according to EU officials.
Six out of 10 cars sold in Europe are corporate fleets, while for some carmakers, the segment accounts for as much as half of their annual sales. Environmental campaign groups such as Transport & Environment argue that a faster green transition of company cars is crucial to meet the 2035 target since they account for more than 70 per cent of new car emissions.
Apart from hitting the auto groups’ petrol car sales, carmakers and corporate fleet operators warn that without more charging infrastructure, grid capacity and end consumer demand the plan would lead to slower turnover in corporate fleets and upend leasing models.
“You would have a smaller European car industry and average fleet age will increase significantly,” said Thomas Becker, vice-president of sustainability and mobility strategy at BMW.
“That means that the carbon reduction impact will be massively diluted because you would have more of the total mileage being done in older combustion engine cars,” he added.
Richard Knubben, director-general at Leaseurope, which represents Europe’s leasing and automotive rental companies, also warned that if customers held on to vehicles longer and car purchases fell, that would also hurt the used prices for EVs.
“There is this [wrong] notion that . . . if we just pump loads and loads more EVs into the second-hand market, prices will go down and everybody will be happy,” Knubben said.
Instead, low resale values for EVs would raise financing costs for corporate buyers, cranking up initial leasing prices and ultimately slowing uptake, he said.
Von der Leyen had earlier considered imposing a total EV mandate on corporate fleets by the end of the decade. But the EU has slightly watered down the proposal to be less than 100 per cent in the face of strong opposition from member states such as Germany and Italy, the people familiar with the discussions said.
According to Leaseurope, the EV penetration rate for its members was 23 per cent last year, compared with nearly 13 per cent for all vehicles sold in Europe.
“Corporations have been ahead of the retail market in electrification, but imposing too many EVs on the corporate fleet risk significantly distorting the automotive market without addressing the real underlying barriers that limit zero emission vehicle adoption,” said John Saffrett, deputy chief executive officer at car leasing group Ayvens.
The European Commission declined to comment.
