UK outpacing Europe for EV fleet sales

The UK is outperforming many European countries in the electrification of it company car fleets, according to new research.

Transport & Environment, an environment pressure group, found that the UK’s beneficial tax rates for electric company cars is having a positive effect on uptake.

In 2023, its data shows 22% of fleet car registrations were electric vehicles (EVs); meaning the UK ranks eighth for share of corporate EV registrations in Europe and fourth in western Europe behind the Netherlands, Luxembourg and Belgium.

To boost EV uptake across the whole corporate market, Transport & Environment is calling for the tax differential between BEVs and petrol and diesel cars to be extended beyond 2027/28, and changes to depreciation rules or introducing higher vehicle excise duty for non-ZEV corporate cars.

Ralph Palmer, UK EV and fleets officer at Transport & Environment, said: “The success of the UK's corporate fleets sector driving the transition to battery electric vehicles cannot be understated - it shows the power of progressive taxation.

“The new government must not think it’s “job done” on corporate cars, and instead play a proactive role to ensure that the corporate channel stays headed in the right direction.

“Providing longer-term certainty for beneficial tax rates for electric company cars, addressing the perverse incentive for PHEVs and tackling increasing corporate SUV sales, while taking steps to provide greater confidence for the wider EV market, should all be on the new Minister’s agenda.”

In 2023, the corporate channel was responsible for 75% of all UK EV sales and is going to be increasingly responsible for driving the transition to zero emission vehicles especially as the ZEV mandate kicks in and takes the proportion of new car sales being all-electric to over 50% in 2028. 

Company cars are responsible for a disproportionate share of emissions as they drive 2.5 times the annual distance of private cars, according to Transport & Environment. Paired their short ownership periods of three to five years, means that faster electrification of the sector would reduce road emissions substantially. It would also have a knock-on effect of supplying the used car market with BEVs much more quickly, significant as used cars made up 79% of all car sales in the UK in 2023.

Transport & Environment believes there remains some “worrying trends” in the corporate channel, however. Corporate plug-in hybrid (PHEV) sales made up nearly three quarters of all PHEVs sold in 2023, largely due to similar tax breaks to EVs.

Quoting recent test data from the European Comission, Transport & Environment says the real world emissions of PHEVs are understated by around 3.5 times. 

The group is also concerned that SUV sales remain high in the corporate channel, accounting for 62% of registrations in 2023.

It is calling for benefit-in-kind rates for PHEVs to be regraded beyond 2028 to reflect their real world emissions and that the taxation of EV company cars after 2030, factors in weight or efficiency to encourage smaller, more affordable cars to enter the corporate channel.