Could corporate fleets drive an affordable net-zero transition for road transport?

Corporate fleets are currently lagging behind households in electric vehicle (EV) purchasing rates, but could spur a zero-emission vehicle market that is more affordable due to their frequent car uptakes and higher buying power.

Could corporate fleets drive an affordable net-zero transition for road transport?

Image: Ingka Group

Corporate uptake of electric vehicles continues to lag behind households across Europe for the third year running, although trends suggest that EV sales could reach 30 million globally in the next few years.

New research from Transport & Environment (T&E) has found that corporate electric vehicle purchases are behind household rates for the third year running, despite the majority of new car registrations in the EU coming from corporates.

Despite six out of ten new car registrations in the EU coming from corporates, just 14% are electric, compared to 15.6% for domestic and household purchases.

As commercial fleet vehicles typically drive twice as many miles as private vehicles, they will emit more. Commercial vehicles also have shorter ownership periods and enter the second-hand market after a few years only, at a lower price. T&E believes this could spur demand for second-hand EVs that are more affordable, but only if corporates invest more in EVs.

T&E also warns that corporates tend to invest in “fake” electric cars – plug-in hybrids – that emit approximately 3.5 times more on average than their officially declared values.

In response, T&E is calling for the current public consultation on Greening Corporate Fleets to propose a new Corporate Fleets Regulation. This would set binding zero-emission vehicle targets for fleets that consist of more than 100 cars, and leasing companies to ensure 100% of new registrations are electric by 2030.

Additionally, T&E proposes that national governments should reform corporate car taxation, to place additional costs on diesel, petrol and plug-in hybrid vehicles.

Growth outlook

In related news, new estimates from BloombergNEF states that passenger EV sales could exceed 30 million in 2027 globally.

BloombergNEF’s Long-Term Electric Vehicle Outlook (EVO) shows that EV adoption is still growing, despite some short term set backs in developed countries such as the US. In the US, the presential election has caused the EV market to pause, compounded by a lack of lower-cost models.

The Outlook found that falling battery prices, changing technology and innovation and improving upfront costs are spurring long-term growth for the EV market.

Under some scenarios, passenger EV sales are expected to exceed 30 million in 2027 and grow to 73 million per year in 2040, contributing 33% and 73% to global car sales in those years, respectively.

This would spur a global EV market – not just restricted to passenger EVs – that hits $9trn by 2030 and $63trn by 2050. This would need to be supported by a $35bn investment in battery cell advancements and plants by the end of the decade. However, BloombergNEF notes that companies are already planning to invest $155bn in such solutions, which should offset the finance gap.

Related news: New coalition launches to accelerate adoption of electric HGVs

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie