EU Seeks to Boost Electric Vehicle Adoption by Ending Tax Breaks for Fossil Fuel Cars
BRUSSELS, March 4 (Reuters) – The European Commission intends to spur the demand for electric vehicles (EVs) within corporate fleets by eliminating tax benefits for company cars powered by petrol or diesel, according to a draft document slated for release on Wednesday.
The EU executive is set to unveil its auto industry action plan following a month of consultations with industry leaders aimed at ensuring EU car manufacturers can electrify their fleets and remain competitive against more advanced rivals in the U.S. and China.
European automakers contend they are launching new models, but consumer acceptance remains tepid. The market share of EVs in Europe decreased by one percentage point, reaching 13.6% in 2024, per the automaker association ACEA, although it did climb to 15% in January.
The draft communication, viewed by Reuters, indicates that corporate fleets account for around 60% of all new car registrations in the European Union.
“To ensure an adequate uptake of zero emission vehicles in corporate fleets, eliminating distorting subsidies for fossil fuelled vehicles is instrumental,” the document states.
By the conclusion of the year, the draft paper notes, the Commission will propose legislation to decarbonize corporate fleets, including measures to support the demand for electric vehicles.
Also on Wednesday, the Commission plans to publish recommendations for national, regional, and municipal authorities on actions they can take to expedite EV adoption.
ACEA has cited limited charging infrastructure as a contributing factor to the sluggish demand, with nearly 60% of charging stations concentrated in just three countries. Germany’s recent cut to subsidies and a lack of affordable EVs to date have also dampened demand.
