LONDON: The European Union’s five largest economies collectively spend €42 billion ($45.6 billion) each year subsidizing fossil-fuel-powered company cars, according to a recent study by Transport and Environment (T&E). The report urges a redirection of these funds toward electric vehicle (EV) subsidies to align with the EU’s green transition goals.
Company cars account for about 60% of new vehicle sales across Europe. The study, conducted by Environmental Resources Management (ERM), highlights Italy as the largest contributor, spending €16 billion annually on subsidies for fossil-fuel company cars, followed by Germany with €13.7 billion. France and Poland provide €6.4 billion and €6.1 billion, respectively.
A significant portion of these subsidies—about €15 billion—is directed toward SUVs, which are among the highest polluters. Company car drivers benefit from average tax savings of €6,800 per year, with those driving larger, high-emission models receiving up to €21,600.
T&E’s Director of Fleets, Stef Cornelis, called this practice “completely contradictory” to the EU’s environmental objectives, particularly as Europe struggles to boost electric vehicle adoption. Sales of fully electric cars in the EU plummeted by nearly 44% in August, with major markets like Germany and France seeing significant declines.
The study further noted that the UK is the only country offering financial incentives for company car drivers to switch to EVs. In a letter dated September 17, European Commission President Ursula von der Leyen urged the new EU Climate Chief, Wopke Hoekstra, to prioritize phasing out fossil-fuel subsidies.
For more insights into the EU’s green transition and the role of EV subsidies, you might explore additional reports by Transport and Environment or research papers on Europe’s shift to sustainable transport options.
