Platform for electromobility

In June 2022, the European Parliament voted for a de facto ban on sales of internal combustion engines (ICE) vehicles by 2035. To reach this objective, the Parliament also voted in favour of creating additional measures, notably to support the demand for zero-emission passenger cars and light-commercial vehicles (ZEV) within the Union market (AM. 80). It is essential that these accompanying measures are as ambitious as those of the end goal. A fleet mandate to cover the period prior to 2030 would ensure that demand meet supply.

In May 2021, the Platform for electromobility, an alliance of 40+ industries, NGOs and associations covering the whole value chain and promoting the acceleration of the shift to electric mobility, outlined the benefits and opportunities of dedicated legislation to complete the decarbonisation of corporate fleets. This paper now provides policy makers with overarching principles that should lead the elaboration of the upcoming legislative proposal that will bind the electrification of corporate fleets.

1. Standalone legislation on private fleet

As indicated by the use of the plural ‘proposals’ in the approved text, we recommend that the European Commission prepare two separate, dedicated pieces of legislation; one on the private fleet, the other on the public fleet. While the latter should be addressed in the revision of the Clean Vehicle Directive (CVD), and invite Member States (MSs) to lead by example with ambitious electrification plan for public authorities’ fleet, we must note that 99%1 of fleet-owned cars are the property of private individuals. The dynamics between private and public fleets are also different in areas such as size, procurement rules, and thus should be treated separately. In addition, as the first reference period under the CVD has only just begun, we believe any revision to the Directive would be premature.
The priority should therefore be given to address the decarbonisation of private fleets, which represent more than 60% of EU sales.

2. Need for a Regulation

While the revision of the CVD is appropriate to decarbonise the public fleet, we believe a Regulation, rather than a Directive, is essential to electrify the private fleet. A Regulation would:

1. Stimulate deployment of electric mobility throughout the EU before ICE phaseout, by accelerating decarbonisation of the corporate cars that drive more than 2.25 times further than individually owned cars.
2. Boost zero-emission uptake in the B2B segment, for which the total cost of ownership is superior, because of higher annual mileages.
3. Create a plentiful second-hand market that ensures affordability of zero-emission vehicles before 2035.
4. Avoid the delays in implementation that a Directive might entail, such as those that can currently be seen with the Clean Vehicle Directive. While climate change remains an ongoing threat, the time needed to conclude negotiations on a Regulation would be compensated for by the inevitability of its direct implementation. A Regulation will reduce the transition time to electric mobility between those Member States that have already announced the phaseout of ICEs by 2030 and those yet to do so.
5. Bring certainty to both EV manufacturers and those companies purchasing targeted fleets. Such certainty for manufacturers, along with ambitious CO2 emission performance standards for new cars and vans, will ensure that the supply of EVs is able to meet the EU’s climate ambitions. It will also help avoid companies competing for a limited supply of ZEVs.
6. Introduce stronger safeguards than a Directive against potential Member State market distortions, notably in the form of unfair price increases for the private fleet owners.

3. Almost-complete decarbonisation by 2030

The final target should be 95% of new fleet purchases of passenger cars to be ZEVs by 2030. The last 5% would be difficult to decarbonise, both technically and economically, due to the existence of some specialty vehicles. Setting the final target at a lower level, or after 2030, would not unlock the 10 benefits of mandating the decarbonisation of corporate fleets.

In the area of light-duty vehicles, the market of vans is more limited in supply compared to passenger cars. Therefore, the sector should have both a dedicated trajectory and a dedicated fleet size threshold, above which the Regulation will apply. Vans, with their own specificities, cannot follow at the same pace as cars. Their lifecycle is longer (28 years average) and their usages are usually unique and adapted to specific professional needs. In order to respect the nature of this market, targets must be adapted accordingly. Platform members agree on the need to build a dedicated trajectory and targets for Light Commercial Vehicles (LCVs), although an impact assessment is needed to shape the timeline and the curve appropriately.

While a 95% final target for passenger cars would already ensure a certain level of flexibility, the text voted by the Parliament invites the Commission to also take into account regional disparities.

4. Flexibility measures

Targets should therefore be set at EU level rather than differing targets per Member State. This would prevent some arbitrage strategies from manufacturers and overpricing in those countries in which targets would have been higher.

Setting targets at a European level, based on a certain fleet size, would also ensure that large companies meet the fleet target in each Member State in which they operate. This would ensure that separate strategies are not in place in different countries. Currently, in the numerous electrification strategies of companies operating across Europe, efforts are being centralised on more advanced markets, setting aside those markets where electrification of transport is lagging behind. This must change, as a ZEV second-hand market should be developed in CEE Member States as a matter of urgency.

Given the need to decarbonise the B2B segment in every Member State, while simultaneously taking into account the current differing starting points and ability for companies to effectively procure new

ZEVs, we strongly suggest two types of flexibilities that could be granted. One, a delay of a maximum of two years of the mandate, and two, an increase in the minimum fleet size to which the mandate applies.

It is important that, when it comes to eligibility for such flexibilities, the two types should be applied either at Member State level or at company level. Whichever option is chosen, the flexibility requests should be reviewed and assessed by the European Commission to ensure harmonisation at EU level.

Flexibility is essential to ensure the fair transition to clean fleets, as are interim targets:

5. Interim targets

Interim targets are essential to ensure a gradual and smooth transformation of the European private fleets. Without ambitious short-term targets, and even taking into account the proposed flexibilities above, fleets covered by the Regulation would need to undergo drastic change shortly before the final deadline. An unanticipated increase in demand risks triggering uncertainties not only for the business models of fleet owners and users but also for the availability, sustainability and security of the value chain for ZEVs. Hence the importance of ambitious interim targets, clearly set ahead, to increase visibility for car manufacturers and fleet managers alike. The objective of the Regulation is to accompany the shift introduced by the de facto ban on sales of ICE vehicles for users, but also to ensure demand matches supply all along the transition.

Although setting an interim target for 2025 may seem a tight timeline for a legislation to enter into force in 2024, a 2025 target close to half of all newly procured vehicle in corporate fleets to be zero-emissions is reachable: market analysis show an organic share of ZEV in fleet purchases of up to 35%. A recent study, based on 1300 fleets representing over 46,000 vehicles across Europe, shows that nearly 60% of fleets could save money by transitioning to electric vehicles without any incentives.2 With little impact – and a positive one in most cases – on the purchase decisions of corporate fleets, such a target for 2025 would allow the creation of a secondary market to make EVs more accessible by 2030. A linear trajectory for a convenient transition to 95% final target procurement would then set the following interim targets:

(1) by 2025, 45% of renewed vehicles are zero-emission;
(2) by 2026, 55% of renewed vehicles are zero-emission;
(3) by 2027, 65% of renewed vehicles are zero-emission;
(4) by 2028, 75% of renewed vehicles are zero-emission;
(5) by 2029, 85% of renewed vehicles are zero-emission;
(6) by 2030, 95% of renewed vehicles are zero-emission.

6. Stock target

In addition to renewal targets focusing on the share of ZEV in the new acquisitions of corporate fleets, stock targets should also be included. Stock targets would avoid creating long-term leasing contracts on ICE vehicles just before each interim renewal targets enter into force. On top of annual targets for new vehicles entering the fleet, a 75% zero-emission target for the whole fleet by 2030 should be inserted to prevent companies signing long-term ICE lease or bulk-buying ICE vehicles in 2023 or 2024, in other words before the regulation enters into force.

7. Reporting

Reporting should be managed by Member States and supervised by the European Commission. Alternatively, France offers a testbed for reporting obligation for a similar mandate. In France, there are reporting obligations for all companies based in the country that fall under the decarbonisation mandate of January 2021. Declarations are made on an annual basis, and are reported on the French government’s open data website. These include a CSV file with information relating to company registrations, descriptions of the fleet and of the low emissions / very low emissions renewal of vehicles Y1. Member States could rely on such a declarative open data by the companies to then aggregate the input and send it to the European Commission for compilation. A control, based on licence plates registered to a national registration agency or equivalent, should be conducted by the Government to verify the data entered by companies for their annual reporting.

Member States should, on an annual basis, send the aggregated data collected nationally to the European Commission to provide an EU-wide overview of the situation.

8. Revision of the objectives

The Regulation should introduce a review clause, by 2028, in the event that the objectives are not achieved. This clause would allow the European Commission to propose additional measures to ensure the Regulation is properly applied in every Member State.

Platform members also recognise the positive impact that such a mechanism would have on the decarbonation of heavy-duty vehicles. At the same time, platform members equally stress the importance of support mechanisms for the rollout office-based charging, from subsidies to tax discounts.