EUROPEAN COMMISSION

Strasbourg, 16.12.2025

SWD(2025) 1060 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT REPORT

Accompanying the document

Proposal for a Regulation of the European Parliament and of the Council

on Clean Corporate Vehicles

{COM(2025) 994 final} - {SEC(2025) 994 final} - {SWD(2025) 1061 final}

Table of contents

1.Introduction: Political and legal context

1.1.Political Context

1.2.Legal Context

1.3.Market Context

1.3.1.    Corporate vehicles in the overall EU road vehicles market    

1.3.2.    Market structure and characteristics of corporate fleets    

2.Problem definition

2.1.What are the problems?

2.2.What are the problem drivers?

2.3.How likely is the problem to persist?

3.Why should the EU act?

3.1.Legal basis

3.2.Subsidiarity: Necessity of EU action

3.3.Subsidiarity: Added value of EU action

4.Objectives: What is to be achieved?

4.1.General objectives

4.2.Specific objectives

5.What are the available policy options?

5.1.What is the baseline from which options are assessed?

5.2.Description of the policy options

5.2.1.    Possible policy options and preliminary screening of options    

5.2.2.    Discarded policy options    

5.2.3.    Retained policy options    

6.What are the impacts of the policy options?

6.1.Economic impacts

6.1.1.    Impacts on businesses    

6.1.2.    Impacts on citizens    

6.1.3.    Impacts on national public authorities    

6.1.4.    Impacts on the European Environment Agency    

6.1.5.    Impacts on competitiveness    

6.1.6.    Impacts on small and medium enterprises (SMEs)    

6.1.7.    Impact on the functioning of the internal market and competition    

6.1.8.    Impacts on innovation and technological development    

6.1.9.    Territorial impacts    

6.1.10.    Digital by default    

6.2.Social impacts

6.2.1.    Impacts on health    

6.2.2.    Impacts on employment    

6.2.3.    Impacts on fundamental rights    

6.3.Environmental impacts

7.How do the options compare?

7.1.Effectiveness

7.2.Efficiency

7.3.Coherence

7.4.Subsidiarity and proportionality

7.5.Sensitivity analysis

7.6.Assessment of the impacts of EU content requirements

8.Preferred option

8.1.Identification of the preferred policy options and stakeholder views

8.2.REFIT (simplification and improved efficiency)

8.3.Application of the ‘one in, one out’ approach

9.How will actual impacts be monitored and evaluated?

Annex 1: Procedural information

Annex 2: Stakeholder consultation (Synopsis report)

Annex 3: Who is affected and how?

Annex 4: Analytical methods

Annex 5: Competitiveness check

Annex 6: SME check

Annex 7: Discarded policy options

Annex 8: Modulation of the targets for cars and vans

Annex 9: Monitoring and evaluation

Annex 10: Incentives for zero-emission corporate vehicles at national level

Glossary

1.Introduction: Political and legal context

This Impact Assessment accompanies a new legislative proposal on clean corporate vehicles. The accelerated uptake of zero-emission vehicles (ZEVs) in corporate fleets is important for supporting the decarbonisation of the European road transport sector, while safeguarding the competitiveness of the European automotive industry and ensuring an overall fair transition through the accelerated build-up of second-hand markets for ZEVs.

1.1.Political Context

The automotive sector is a key European industry. In 2024, the sector accounted for roughly EUR 1 trillion of GDP, a third of private research and development investment in the EU and it provides direct and indirect employment to 13 million Europeans. For commercial vehicles, European lorries makers account for more than 40% of the world market 1 . Road transport is the dominant transport mode in the EU, accounting in 2023 for 52.6% of total freight transport activity and 81.2% of passenger transport activity, while being responsible for 22.6% of EU greenhouse gas emissions 2  and 35% of total NOx emissions 3 .

At present, the automotive and road transport sectors are undergoing a structural transformation. The shift to sustainable mobility and zero-emission powertrains is accelerating, driven by global competition and regulatory requirements that address the need to reduce emissions from road transport in order to achieve the EU’s climate and air quality objectives. The European Green Deal Communication 4 and the European Climate Law 5 set out the steps towards climate-neutrality by 2050 and the need to reduce transport greenhouse gas emissions by 90% by 2050, relative to 1990. The Sustainable and Smart Mobility Strategy 6  recognised that this systemic change requires almost all road transport vehicles in the EU to be zero-emission by 2050 and announced targeted actions to boost the uptake of ZEVs in corporate and urban fleets. 

To help secure global competitiveness of the European automotive sector and maintain a strong European production base, the Commission adopted on 5 March 2025 the Industrial Automotive Action Plan 7 . Under the overall umbrella of the Clean Industrial Deal, the Plan sets out a strategic industrial policy framework to help the automotive industry master the transition to sustainable and smart mobility that lies ahead. In this context, the Decarbonise Corporate Fleets Communication 8  further exemplified the key role of corporate vehicles, given their larger market share and significant impact on the second-hand vehicle market 9 , where the majority of Europeans are getting their vehicles from 10 . It also noted that accelerating the uptake of zero-emission vehicles in corporate fleets will not only further reduce transport emissions but can also be a tool benefitting the competitiveness of European automotive sector by increasing demand, and it concluded that further action is needed The Commission President in the 3rd Strategic Automotive Dialogue on 12 September 2025 11  confirmed the need for action on accelerating uptake of zero-emission vehicles in corporate fleets.  

Through its potential to reduce emissions, this initiative will contribute towards the United Nations Sustainable Development Goal (SDG) 13 “Take urgent action to combat climate change and its impacts”. It will also indirectly support Sustainable Development Goal (SDG) 3 “Ensure healthy lives and promote well-being for all at all ages”, target 3.9 (substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination).

1.2.Legal Context

At present, there is no EU-level initiative specifically targeting corporate vehicle fleets. Corporate vehicles are, however, affected by other EU legislation, most notably the CO2 emission performance standards for vehicles 12 , the Clean Vehicles Directive 13 , the EU Emissions Trading Scheme for road transport (EU ETS2) 14 , Energy Taxation Directive 15  and the Eurovignette Directive 16 . The uptake of ZEV in corporate fleets is also supported through the provisions on deployment of recharging and refuelling infrastructure under the Alternative Fuels Infrastructure Regulation 17 .

On the supply-side, the CO2 emission performance standards for light-duty vehicles (cars and vans) and heavy-duty vehicles define a clear trajectory towards the gradual decarbonisation of new registrations. By 2035 all new light-duty vehicles must achieve zero tailpipe emissions 18 , while emissions of new heavy-duty vehicles (most lorries and certain coaches) must be reduced by 45% in 2030 and by 90% by 2040 19 . In addition, for urban buses, 90% of the new registrations must be zero-emission by 2030 and 100% by 2035 20 . These measures fully cover the supply-side, ensuring that an increasing offer of ZEVs becomes progressively available across the EU over the next decade. 

Certain aspects of the CO2 emission performance standards for light-duty vehicles are subject to review, in parallel with this initiative 21 . The two initiatives are complementary, as they both aim to support a fair and effective transition towards a decarbonised road transport, addressing barriers currently faced by vehicle manufacturers while maintaining the broad approach and ambition. The CO2 standards act on the supply-side incentivising vehicle manufacturers to put on the market zero-emission vehicles, while the clean corporate vehicles initiative aims at ensuring demand for such vehicles especially in those market segments where the effectiveness in reducing emissions is higher. The revision of the CO2 standards introduces flexibility to mitigate non-compliance risks while staying the course on the transition. The two initiatives are therefore coherent and working towards the same objective, since the clean corporate vehicles initiative will provide greater certainty about the level of demand for ZEVs that manufacturers can expect from the market segments that are capable of a faster and more efficient transition. Together, the two initiatives will create a more favourable legal framework for the competitiveness and sustainability of the EU road transport sector.

In addition, the EU ETS2 22 establishes a carbon price signal to incentivise emission reductions, while the Eurovignette Directive 23 contributes by ensuring that road charging schemes reflect environmental externalities. EU ETS2 will cover and address the CO2 emissions from fuel combustion in buildings, road transport and additional sectors (mainly small industry not covered by the existing EU ETS). The ETS2 will complement sectoral policies, also helping Member States achieve their emission reduction targets under the Effort Sharing Regulation (ESR) 24 . There are synergies between this initiative and the ETS2. On one hand, this initiative is expected to drive a higher uptake of zero-emission vehicles relative to the baseline, avoiding pressure on the carbon prices. On the other hand, the carbon price set by the ETS2 will provide a market incentive for investments in zero-emission mobility. Both co-legislators have introduced a postponement of ETS2 by one year, to 2028, in their respective positions on the 2040 climate target proposal, amending the European Climate Law. The synergies between the two initiatives remain the same, even if the start of the ETS2 is postponed by one year. Even with one year delay for ETS2, Member States remain legally obliged to meet their binding 2030 targets under the Effort Sharing Regulation, ensuring that the EU stays on course to climate neutrality. In this context, it should also be noted that under the Effort Sharing Regulation Member States are already putting in place measures covering the transport sector. This initiative aims to further bolster those efforts.

Currently, the main demand-side measure on road transport vehicles is the Clean Vehicles Directive (CVD) 25 . The CVD requires Member States to ensure that clean vehicles 26 represent a minimum share of all public procurement on their territory over two five-year periods. The Directive applies to all procurement of vehicles by a Contracting Authority or Contracting Entity under EU public procurement rules, including purchases, lease-purchase, rental or services contracts 27 , but it does not define the concept of “public fleet”. As a result, coverage varies significantly across vehicle types: public procurement accounts for over 70% of buses, below 5% of lorries and 1% of light-duty vehicles 28 . Therefore, while a significant share of urban buses falls within the scope of the CVD, the majority of light-duty vehicles and lorries are outside its coverage.

The Alternative Fuels Infrastructure Regulation sets binding minimum targets for rollout of recharging and refuelling infrastructure to support the required uptake of alternative fuel vehicles across all transport modes and in all EU Member States 29 .

EU level demand-side measures to support the transition to zero-emission corporate vehicles and to complement the supply-side measures in place, are limited in coverage, and have a strong impact mostly on the market segment of urban buses. In addition, the support frameworks at national level for corporate ZEV are fragmented, as further explained in section 2.2. For this reason, this impact assessment focuses on demand-measures focusing on cars, vans and lorries.

1.3.Market Context 

In 2023, approximately one million companies were registered in the EU as road transport operators, of which 600,000 companies in haulage and 474,806 companies in passenger transport 30 . However, corporate vehicles are used much more broadly, as companies across different economic sectors 31  own or operate them, contributing to a very large and diverse EU road vehicle fleet.   

1.3.1.Corporate vehicles in the overall EU road vehicles market

In 2023, there were almost 290 million vehicles on European roads, of which approximately 250 million cars, 30 million vans, 0.7 million buses and coaches, and 6 million lorries 32 . Each year, around 10 million new cars, 1.5 million new vans, 30 thousand new buses and coaches and 300 thousand new lorries are registered in the EU. While around 42% of new car sales on the European vehicle market are to citizens (i.e. physical persons who purchase a vehicle in their own name), the rest of the cars, around 90% of the vans, and almost all buses, coaches, and lorries are purchased by corporate actors 33 . These include companies  buying vehicles for their own use, leasing companies and financial institutions buying vehicles to lease them to individuals or other companies, as well as rental and taxi companies, which acquire vehicles to provide mobility services. It is important to note that, due to their shorter initial ownership duration and faster turnover, corporate cars represent a significantly higher share of new registrations than of the stock of vehicles on European roads. The market for trucks is substantially different from that of cars and vans, as there are no real privately registered vehicles, but corporate vehicles represent the almost totality of new registrations.

1.3.2.Market structure and characteristics of corporate fleets

While the term “corporate vehicle” can be used to identify any vehicle registered by a legal entity (as opposed to citizens), this definition includes a broad range of very different vehicles, operators, fleets, and business models. Corporate vehicles can be divided into a set of broad categories based on the type of vehicle and activity, as presented in the Table 1 and further explained below. Understanding the market structure and characteristic of corporate vehicles is essential for assessing the impacts of possible regulatory intervention.

Table 1: Subcategories of vehicles as share in the corporate vehicle new sales in 2024

Source: Dataforce database; Note: For cars and vans, the data coverage for all subcategories is available for 11 Member States (BE, CZ, DK, FR, IT, LV, LT, NL, PL, SK, ES), with for leasing and long-term rental category data is not available for 16 Member States, including the biggest automotive market (DE).

Leasing fleets. Leasing companies own large fleets of vehicles that they lease to other companies (large as well as SMEs) and/or to citizens. This category presents significant overlaps with some of the others, as for example company cars and vehicles used in true fleets are often procured through leasing 35 . This includes both operating and financial leasing; in both cases, the leased vehicle remains in the ownership of the leasing company but in the case of financial leasing the risks and rewards of ownership are transferred to the lessee. Financial leasing generally entails a purchase option for the lessee at the end of the contract period. Operating leasing is essentially a long-term rental agreement and often involves a full-service package including maintenance and insurance. For companies, the balance sheet treatment between operating and financial leasing can vary, with implications for their tax and credit ratings, depending on the legal and fiscal framework in each Member State 36 .    

Car leasing fleets represent a large share of corporate car fleets (more than 40% of new corporate registrations in 2024), as shown in the table above. This means that about 2.4 million new cars on the European market are leased to corporate customers every year. This is a consolidated market, dominated by a relatively small number of large operators managing the large majority of the market such as multi-brand lessors Ayvens, Arval, Alphabet (BMW) and Athlon (Daimler) and the four European manufacturers’ captives, Volkswagen Financial Services, RCI Bank and Services (Renault), Free2Move Lease (PSA) and Leasys (Fiat). Customers in the leasing sector are split roughly into around two thirds large companies and one third SMEs and citizens 37 . Leasing companies typically resell their cars after 3-5 years 38 , resulting in a relatively fast turnover to the second-hand market. The type of actors involved in the leasing of vans and lorries are similar to those of cars, but the market is significantly smaller, both in terms of number of vehicles involved and market shares. Citizens represent only a negligible share of van and lorries leasing clients.

Company cars. These are vehicles provided by an employer to an employee as a benefit-in-kind, which the employee can drive for both business and private purposes. They typically have a slightly higher yearly mileage than the average, especially when the employer also provides coverage of the fuel costs as a benefit-in-kind. Company cars are often procured through leasing, so that there can be a significant overlap with leasing fleets as described above 39 . They usually benefit from fiscal incentives that are not available to vehicles purchased by citizens – this is often a key driver in the choice to provide such a benefit-in-kind as opposed to a corresponding increase in salary. These benefits usually apply in a similar way irrespective of whether the car is procured by the employer through purchase or leasing.

Rental fleets. Rental companies rent cars or other vehicles to other companies or citizens. The rental of different vehicle types (cars, vans, etc.) presents noticeable differences. In particular, while car rental is mostly touristic or business, van rental primarily represents a logistics and mobility option for companies. The car rental market is rather concentrated as 90% of the market (in car rental sales) is estimated to be controlled by five main players: Europcar Mobility Group (with its brands Europcar and Goldcar, 29%), Sixt SE (21%), Avis Budget Group Inc (17%), The Hertz Corp (13%) and Enterprise Holding Inc (10%) 40 . A significant share of the revenue in the car rental industry is generated at airport locations. Major rental companies indicate that their share of revenue generated at airport represents more than half of their total revenues, and that airport stations tend to have a significantly higher revenue per vehicle than other locations 41 .  

Vehicles registered by manufacturers themselves. This includes e.g. showroom and test vehicles. These vehicles reach the second-hand market very quickly (usually under a year since first registration, with comparatively small mileage). Their market share varies significantly across different Member States, depending among others on the presence and relative size of vehicle manufacturers, going from less than 3% in some Member States to almost 30% in others 42 .

True fleets. This category includes all vehicles registered by companies and used for their own commercial activities. This includes a number of very different types of vehicles, entities, and business cases, including for example: 

·Urban mobility on-demand service car fleets (taxis, ride-hailing, car sharing); these fleets have a strong link with local and urban mobility and typically operate on the basis of licences setting conditions for their operation. Approximately 370,000 companies operated taxis in 2022, the vast majority of which are micro-enterprises 43 . A significant share of these fleets operates primarily in large cities 44 . 

·Service cars and vans: the cars and vans used by companies to transport equipment and provide services 45 . Because service cars and vans are operated by companies whose main activity is not transport, there are no precise statistics about the number of companies involved at the EU level.

·Logistics fleets: these include the fleets of lorries and vans used to distribute goods. Lorries are almost exclusively registered by companies, so that corporate fleets represent the almost totality of the market; true fleets represent the vast majority of corporate lorries fleets. Logistics fleets are used for long-haul transport and for regional distribution, as well as for last-mile and urban delivery. Large van fleets are typically operated by postal services, e-commerce, large retailers, etc. especially for last-mile and urban delivery. 600,000 companies operate in the road haulage sector, including both large logistics companies operating fleets of tens or hundreds of lorries, and SMEs operating a few or even a single lorry. 87% of companies operating in this sector are micro-enterprises 46 . Large companies typically subcontract a significant part of their road haulage activities (more than 80% according to industry representatives) to other companies, both large and SMEs. This takes the form of contracts between shipping companies and both large and small transport operators; the latter also often sub-contract part of the activity to smaller operators, so that it is common to have three or four levels of sub-contracting between the company that owns the goods to be transported (the so-called “shipper”) and the enterprise that owns and operates the lorries that are actually transporting and delivering those goods 47 . 

The vehicles in true fleets can either be purchased or leased by the companies that operate them, and in many cases leasing is the preferred option, especially for cars and vans. There is a significant overlap between this category and the leasing fleets described above, also in the way vehicles are recorded in statistics on corporate vehicle types 48 .

2.Problem definition

The problem, problem drivers and implications that are relevant for this initiative are presented in Figure 1 .

Figure 1: Overview of problem drivers, problems and consequences

Source: European Commission

2.1.What are the problems?

The problems that this initiative aims to tackle are the low uptake of ZEVs in corporate fleets (cars, vans and lorries), and the insufficient availability of affordable ZEVs to ensure a fair transition. Due to their high share in new vehicle registrations, and their specific characteristics in terms of vehicle operations, corporate vehicles have a significant potential to accelerate the uptake of zero-emission vehicles in the EU in order to increase transport emission reductions, to boost the competitiveness of the European automotive industry and to ensure a fair transition (by increasing the uptake of ZEV in the second-hand market).

A substantial strengthening of demand for ZEVs from corporate fleets is needed to provide greater certainty about the level of demand for ZEVs that manufacturers can expect from these market segments, that are capable of a faster and more efficient transition. The 2030 targets under the CO2 standards for cars, vans and lorries require an accelerated uptake of zero-emission vehicles in the next years. Without further regulatory intervention at the EU level that enables clear market direction for the uptake of ZEV in corporate fleets at national level, the potential of the corporate vehicles to contribute to the necessary demand will remain underexploited. This is because they represent a significant share of new registrations, they display higher mileage and faster turnover. However, it should be noted that this is a targeted initiative and other initiatives under preparation, such as the Industrial Accelerator Act, are better placed for addressing the competitiveness of the European automotive industry.

Problem 1: The uptake of zero-emission vehicles in corporate fleets (cars, vans and lorries) is low

Corporate vehicles represent around 58% of new registrations of cars 49 , around 90% of new registrations of vans 50 and virtually all new registrations of lorries 51 . Despite differences among subcategories (e.g. leasing fleets, company cars, and true fleets), the share of zero-emission vehicles in corporate fleets remains low at close to 17% of new registrations for cars, 8% for vans and 3.7% for lorries in the first half of 2025 52 . 

In 2024, the share of ZEVs in new registrations by leasing fleets was 16%, somewhat higher than both the overall market average (13.6%) and the average in new corporate registrations (14%). Some of the main multi-brand lessors report significantly higher ZEVs shares in both fleets and new registrations compared to the market average 53 . In the first half of 2025 the share of ZEV in new registrations by leasing fleets increased to 17.8% (with the overall market average of ZEVs rising to 15.5%) 54 . 

A large share of company cars and service vehicles, such as taxis, are often leased rather than purchased. The share of ZEVs offered by large leasing companies can therefore significantly impact the choices of other corporate fleets managers. A low share of ZEVs in the available leasing options may represent a bottleneck for the decarbonisation of road transport operations, while a higher share could accelerate uptake and adoption of ZEVs across corporate fleets and in the private market, including through faster availability of second-hand ZEVs.

Company cars and true fleets of cars operated directly by firms recorded ZEVs shares in new registrations of 17% and 18%, respectively, in 2024, and 24% and 20% respectively in the first half of 2025 55 . While above the overall market average, these shares remain insufficient to fully capture the emissions reduction potential of high-mileage corporate vehicles. Vehicles in some true fleets are responsible for a disproportionately high share of emissions compared to other use cases, due to their particularly high yearly mileage 56 . A faster shift to ZEV in those fleets could substantially reduce real-world road transport emissions, irrespective of whether the vehicles are leased or purchased.

Rental car fleets recorded only 5% of ZEVs in new registrations in 2024, significantly below both the overall market average and the average share of ZEVs in new corporate registrations, and 6.1% in the first half of 2025 57 . Rental vehicles typically have comparatively high yearly mileage, which increases their potential impact on real-world emissions reductions. Furthermore, among different corporate fleets, short-term (few days to few weeks) rental cars are usually among the fastest to reach the second-hand market, typically in less than a year 58 . As a result, a higher share of ZEVs in these fleets could accelerate both emission reduction and enhance the affordability of ZEVs for citizens. Vehicles used for short-term rentals, such as rental car fleets at airports, other multimodal hubs or tourist areas represent a significant share of the car rentals. They can play a pivotal role in increasing the visibility of ZEV solutions, offering an opportunity to experience zero-emission technology, and addressing existing user concerns such as range anxiety. However, at present, the low share of ZEVs in rental fleets limits the realisation of these benefits, and the potential for emission reductions, and improved affordability of ZEVs remains largely untapped.

Vehicles registered by manufacturers themselves accounted for 12% of ZEVs in new car registrations in 2024 slightly below the overall market average, and 18% in the first half of 2025 59 .  

Logistics fleets recorded a share of 8.2% ZEVs in new registrations of vans, and 3.4% ZEVs in new registrations of lorries in 2024 (3.7% in the first half of 2025) 60 . According to ACEA, 73% of road freight tonnage is carried over distances of less than 150 km - well within the range of existing ZEVs models - while less than 2% gets carried over 1,000 km 61 . As a result, the potential for emission reductions and transition to ZEVs remains largely underexploited.

While only limited published figures are available, and there are significant differences in mileage between different types of corporate fleets, interviews with associations representing taxi and ride hailing services, consistently indicated typical yearly mileages of around 80,000-120,000 km among their members, while leasing and rental companies also generally indicated significantly higher mileage than private vehicles. These figures are consistent with available sectoral publications 62 . A further indirect confirmation comes from the usage patterns of vehicles: private cars generally spend more than 90% of the time parked, and less than 10% in use 63 whereas for example a taxi or a delivery van typically spends at least 8 hours per day in use on every working day of the year, resulting in significantly higher yearly mileage.

Overall, the low share of ZEV in new registrations of corporate vehicles limits the decarbonisation potential of high-mileage vehicles, slows the diffusion of ZEVs in the second-hand market, and results in missed opportunities to improve energy efficiency and reduce costs.

The low uptake of ZEVs in corporate fleets is seen as a relevant problem by consulted stakeholders: in the 2024 open public consultation (OPC), more than half of the 267 respondents 64  expressed the view that the current share of ZEVs registered by corporate entities is not sufficient to put road transport on the path to adequately contributed towards the climate neutrality target for 2050, and between 38% and 47% (depending on the type of vehicle) of respondents who expressed an opinion on whether corporate vehicles should switch to ZEVs faster than private vehicles either agreed or strongly agreed with this idea.

Problem 2: The availability of affordable zero-emission vehicles is insufficient to ensure a fair transition

Affordability here looks at barriers that do not enable a fair transition, which include situations where a ZEV alternative is not available for the type of planned vehicle acquisition. This is for example because a suitable low-end ZEV model is not yet available on the market (linked to the prevalence of high-end models in the first groups of ZEVs reaching the EU market), because ZEVs are not yet sufficiently available on the second-hand market (linked to the limited time since their increased market uptake), or because more convenient options such as leasing or long-term rental do not yet offer ZEVs for the desired models. In these cases, the prospective user is facing an initial higher capital cost for a similar type of vehicle. In order to switch from a conventional to a zero-emission vehicle the prospective user would also be required to change the planned way of acquiring the vehicle (e.g. buying a higher-end vehicle, buying a new vehicle instead of a second-hand one, or buying a vehicle instead of leasing it), resulting in further additional costs. This effectively limits the capacity of citizens and SMEs to transition to ZEVs. The limited availability of ZEV on the second-hand market is particularly important in light of the fact that 75% of the total yearly registrations of cars are registrations of used cars 65 .

Currently, the portfolio of zero-emission car models is still focused on the higher end of the market and smaller, more affordable models have started to enter the market only recently 66 . In the absence of tailored financing solutions, the higher purchase cost of new zero-emission vehicles represents a significant barrier to their uptake, particularly for SMEs, even in cases where the total cost of ownership (TCO) is competitive 67 . These barriers result in missed opportunities for TCO savings and for competitiveness. The second-hand vehicle market is significantly larger than the market for new vehicle registrations in the EU: in the four largest vehicle markets (France, Germany, Italy, Spain), new cars represent on average only a third of total annual sales 68 , 69 . Based on national statistics available for 15 Member States 70 , 75% of the registrations of cars are registrations of used cars. Availability of ZEVs on the second-hand markets is therefore crucial to accelerate their uptake, especially in the short-term when new ZEVs remain more expensive 71 ; this is particularly relevant for lower income households, which are more likely to purchase second-hand vehicles 72 . At present, however, the share of ZEVs in the second-hand market remains limited due to their relatively recent commercial availability. Consumer organisations note that the current low availability of ZEV on this market hinders consumers’ capacity to benefit from potential savings offered by these vehicles 73 . Moreover, ZEVs currently depreciate faster than conventional vehicles, principally due to rapid technological progress in ZEVs 74 . While this trend improves the competitiveness 75 of new ZEV models compared to conventional ones, it also accelerates the perceived obsolescence of older ZEV models. During the Call for Evidence37 (CfE) that was open for feedback between 25 July and 8 September 2025 76 , 24.6% (117) of those that responded indicated concerns about uncertain resale values and the early-stage nature of second-hand markets for ZEVs, which raises capital costs and leasing rates. 

Cars purchased by citizens typically take longer to reach the second-hand market than corporate cars. Across the largest EU car markets, the turnover of second-hand battery electric cars does not significantly differ from the overall average turnover of cars 77 . Corporate vehicles should therefore play a critical role in accelerating the availability of second-hand ZEVs, due to their faster turnover. Rental cars are normally re-sold within one year 78 and leased vehicles generally reach the second-hand market within 3-5 years 79 , either as a second-hand sale or as second-hand leasing. The second-hand market also plays a key role for commercial vehicles: while large companies tend to buy new vans and lorries, those vehicles are typically re-sold after a few years, mostly to SMEs. Thus, the share of ZEV in new corporate van and lorries registrations by large companies is a critical factor in determining the availability of affordable ZEV options for SMEs and smaller logistics operators.

Consumer associations have highlighted the significant economic benefits of second-hand ZEVs 80 . However, the limited time since most zero-emission models were launched, together with the relatively low share of ZEV in corporate fleets with high vehicle turnover, means that the availability on the second-hand market remains very limited. Regarding key barriers to ZEV uptake, 138 respondents to the CfE (38.7%) have identified the low availability of suitable ZEV models for specific use cases. Heavy- and medium-duty operators emphasise that current ZEV options for some long-haul and demanding duty cycles remain limited or operationally challenging, in particular for specific routes or missions that require carrying heavy loads, due to current ZEV range or weight trade-offs 81 . Some also report model gaps or long delivery times for specific configurations.  

The faster turnover of corporate vehicles compared to private ones means that a higher share of ZEVs in this segment could accelerate the availability of zero-emission options on the second-hand market 82 . This would increase access to more affordable ZEV options, including for lower-income and vulnerable users. The limited share of ZEVs in corporate fleets - especially for rental cars with particularly quick turnover - results in very limited access to ZEVs by lower income and vulnerable users, including both households and SMEs. Member States with a heavy reliance on imported second-hand vehicles are particularly impacted by this 83 . 

Some leasing companies also offer options to lease second-hand ZEVs after the expiry of the first lease, as an alternative to selling them, partly as a strategy to manage higher depreciation 84 . Such offers contribute to the availability of affordable ZEVs on the second-hand market and present comparable advantages to a second-hand purchase in terms of cost.

Problem 2 is affected by a number of other factors addressed by other initiatives, that are outside the scope. However, there are specific aspects that are not sufficiently addressed by other initiatives, such as the current very limited availability of second-hand ZEVs, which has been highlighted among others by consumer organisations and NGOs, or the very limited availability of ZEVs among leasing vehicles. The current market conditions therefore effectively prevent citizens and SMEs, for whom buying a new vehicle can represent a significant barrier in terms of cash flow and financial availability, from switching to ZEVs. Other relevant initiatives, such as CO2 standards for vehicles, Eurovignette Directive, or ETS2, only have a very limited impact on these aspects.

2.2.What are the problem drivers?

Problem driver 1: Fragmented support framework at national level for corporate ZEV

Problem driver 1 concerns the fragmented support framework at national level for corporate ZEV. This fragmentation concerns: 1) the overall level of ambition of national policies for zero-emission vehicles in corporate fleets that vastly differ among Member States and 2) the measures in support of their uptake that differ as well. This leads to uneven level playing field in the EU internal market, including the fact that several Member States do not make use of suitable market levers (e.g. vehicle taxation, road tolling exemptions, etc.) or continue with harmful subsidy practices, because there is no clear long-term market direction that pushes national and regional authorities to take action.

In a study examining five Member States it is estimated that those Member States spend more than EUR 40 billion annually on subsides or fiscal incentives supporting the company car market (registration tax, annual vehicle tax, VAT treatment etc.), most of which benefit conventional vehicles 85 . Although these measures differ across Member States, certain types of support are prevalent in nearly all Member States. These subsidies and fiscal support schemes often hinder the transition of corporate fleets to ZEVs, as they continue to favour the purchase and operation of conventional ones. The impact is particularly pronounced for corporate cars, which often benefit from favourable tax treatments and their classification as an in-kind benefit.

The study mentioned above highlighted that Member States provide fiscal incentives in the form of tax reductions for both the employer and the employee when a company car is procured by the employer. Employees typically benefit from a lower benefit-in-kind tax rate, reduced social security taxes on the benefit-in-kind, and lower taxation on the benefit-in-kind on fuel for private use covered by the employer. Company cars are also often subject to lower ownership and registration taxes. Collectively, these incentives still tend to favour conventional vehicles, reducing the financial attractiveness of ZEVs for both employees and employers.

Some Member States have introduced measures to promote the uptake of ZEVs in corporate fleets, and the market impact of such incentive measures is pronounced. Still, these remain fragmented and do not provide a consistent EU-level framework capable of accelerating the transition to zero-emission corporate vehicles across different fleet types. A summary of the incentives for corporate ZEV at Member State level is provided in Annex 10. For large fleet operators active across different Member States - such as leasing, rental or large logistics companies - this fragmentation makes it more cumbersome to strategically plan the switch to ZEVs across the whole fleet and operation, which delays decarbonisation efforts. 174 of the respondents to the CfE (36.6%) reported that existing tax rules and incentives are either insufficient, inconsistent across Member States, or volatile, undermining business cases and long-term fleet planning. 

Respondents to the 2024 OPC 86 identified national taxation and fiscal measures as key incentives for increasing the share of ZEVs in corporate fleets. Specifically, 65% of respondents considered fiscal factors – including vehicle registration tax, yearly vehicle tax and fiscal treatment of vehicles – as important in determining the willingness of fleet operators to include ZEVs in different types of fleets. However, the persistence of tax and other incentives supporting conventional vehicles in corporate fleets combined with the fragmented support for ZEVs across Member States, mean that the overall stimulus for fleet electrification remains insufficient.

Problem driver 2: Current higher purchase costs and operational constraints of zero-emission vehicles compared to conventional vehicles

Higher purchase cost as described in problem driver 2 is meant to depict the typical situation where conventional and zero-emission vehicles with the required characteristics are available, but the zero-emission vehicles have a significantly higher cost. This higher purchase cost has an impact on the business case of corporate vehicles, either directly in terms of total cost of ownership (TCO), or indirectly in terms of difficulties to access finance to cover the higher initial capital cost.

The share of ZEV in new corporate vehicles is limited by a combination of economic costs and operational constraints: in order to be competitive with conventional vehicles, ZEVs would in many cases require either reduced costs or better enabling conditions reflecting the specific corporate fleets’ operational requirements.

From an economic perspective, the choice of a commercial vehicle is usually primarily guided by TCO considerations. ZEVs currently have higher purchase costs and lower operation costs, already resulting in a competitive TCO for some use cases, but not yet for others. Even in cases where the TCO of a ZEV is competitive with that of a conventional one, however, the current high initial investment cost can represent a significant barrier, especially in the absence of tailored financing solutions. This is particularly the case for SMEs, as they are often not considered bankable for obtaining commercial debt solutions for the purchase of zero-emission vehicles.

This issue was highlighted by 344 of the respondents to the CfE (72.3%) who stated that ZEVs still have higher purchase prices and uncertain total cost of ownership (e.g., residual values, financing terms), especially in use cases with specific operational requirements.

In addition, 259 of those that provided feedback to the CfE (54.4%) indicated that a key barrier to the uptake of ZEV is charging infrastructure availability, particularly where fleets require predictable turnaround times. Some corporate vehicles - in particular some true fleets, such as urban mobility on demand fleets, and logistics fleets of vans and lorries - have specific operational requirements in terms of hours of operation, mileage, etc. In cases where sufficiently fast and/or dedicated recharging infrastructure is not available for a given fleet of corporate vehicles, this may result in an effective increase of their operational costs by lowering their effective utilisation rate, thus reducing their TCO competitiveness compared to conventional vehicles 87 . The deployment of sufficient minimum infrastructure to support the uptake of ZEV in all EU Member States is outside the scope of this initiative, and will be ensured by the Alternative Fuels Infrastructure Regulation 88 ; however, the availability of infrastructure for the general vehicle fleet may not in itself be sufficient to meet the specific operational needs of some individual corporate fleets, with the result that for those fleets the shift to ZEVs implies higher operational costs and will not happen in the absence of targeted support measures such as financial incentives balancing those extra costs and improving their TCO competitiveness. 

Other operational requirements (e.g. need to access low- and zero-emission zones, road charges exemptions, access to specialized lanes and requirements in the concession or licencing procedures) and the way zero-emission vehicles are treated in that context – including in relation to favourable conditions and incentives offered to specific corporate vehicle types – offer opportunities to make zero-emission corporate vehicles more attractive and increase their TCO competitiveness. For example, the possibility to operate in a zero-emission zone might make ZEVs more attractive for a logistics company (e.g. for last-mile urban deliveries). An easier access to concessions and licencing in a given urban area could similarly make the choice of a ZEV option more attractive for taxi or ride-hailing companies. However, these incentives are often not being sufficiently exploited by the relevant local, regional and national authorities, and the lack of a coordinated approach further limits their impacts.

It should be noted that operational constraints do not prevent the use of ZEVs, but they make it less economically viable: the ZEV models available on the market allow all types of activities currently performed by conventional vehicles, but in some cases their limitations in terms of range and required recharging time will result in reduced operation time, and therefore (indirectly) higher operation costs. For example, under certain circumstances a zero-emission lorry might need to spend extra time recharging along the route or between deliveries, resulting in e.g. the duration of a 9-hour trip increasing to 10 hours, or a rental car might need to increase the time between two consecutive rentals from 1 to 1.5 hours, to allow time for full recharging. A taxi operated by a driver who does not have access to overnight charging near his home might need to rely on public fast charging, with higher electricity prices. These operational constraints result in additional operation costs, which together with the higher purchase costs of ZEVs, result in higher TCO.

2.3.How likely is the problem to persist?

Problem 1: The uptake of zero-emission vehicles in corporate fleets (cars, vans and lorries) is low. This problem is expected to subside over time as manufacturers will need to increase the share of ZEVs in order to meet the emission reduction targets under the CO2 emission performance standards, inevitably resulting in a higher share of ZEVs also in the corporate market. However, it would still be relevant until 2035 for cars and vans and at least until 2040 for lorries.

Problem 2: The availability of affordable zero-emission vehicles is insufficient to ensure a fair transition. In the absence of EU-level intervention, this problem is likely to subside over time as manufacturers will need to increase the share of ZEVs including in the more affordable segments in order to meet the emission reduction targets under the CO2 emission performance standards. However, it would still be relevant until at least 2030 for new cars and vans and until 2035 for new lorries. On the second-hand market, the problem is likely to persist longer: even as the share of zero-emission vehicles increases and more affordable models reach the market, the time gap between private vehicles first registration and availability on the second-hand market will result in this problem persisting until at least 2036.

Problem driver 1: Fragmented support framework at national level for corporate ZEV. Without EU level action, Member States are expected to retain their current fiscal frameworks, providing an overall insufficient stimulus for the switch to zero-emission vehicles. On average, they are expected to continue at least partially to subsidise fossil fuels use, and market signals promoting zero-emission corporate vehicles will remain only partially effective due to their fragmented approach. The share of ZEVs among company cars will remain low in several Member States, while the fragmented approach will hinder the full switch to ZEVs by large fleet operators active across different Member States, such as leasing companies, rental companies and large logistics companies.

Problem driver 2: Current higher purchase costs and operational constraints of zero-emission vehicles compared to conventional vehicles. In the absence of EU-level intervention, the barriers delaying the large scale switch to ZEVs in corporate fleets are expected to persist, resulting in a slower uptake of zero-emission solutions. SMEs in particular will keep facing significant barriers in access to commercial debt finance for the higher capital expenditure of a ZEV, which will not be sufficiently compensated by existing operational and fiscal incentives. While over time the purchase cost of ZEVs will decrease and their market shares increase in both corporate fleets and private registrations, the trajectory will remain significantly lower than would be needed to fully exploit the emission reduction opportunities offered by a faster transition.

3.Why should the EU act?

3.1.Legal basis

The legal basis for this initiative is Article 91 of the Treaty on the Functioning of the European Union (TFEU), which enables the EU to lay down common rules applicable to international transport and to improve the functioning of the internal market in the transport sector. Corporate fleets often operate across borders, and the absence of common requirements for the uptake of ZEVs creates a risk of fragmented national approaches and unequal conditions of competition. EU legislation adopted under Article 91 TFEU would support the decarbonisation of the transport sector while ensuring coherent internal market functioning for mobility and logistics services.

3.2.Subsidiarity: Necessity of EU action

National measures alone cannot ensure a level playing field and support a stronger demand push that is needed now to get to the required acceleration of zero-emission vehicle markets in the EU. Without an overall regulatory push at the EU level that commits all Member States to take measures to support transport actors in their transition to zero-emission mobility, national market support and implementation structures remain divergent and of different ambition, not utilising fully the effectiveness and efficiency potentials embodied in key market levers such as fiscal incentives and support schemes; this would maintain a non-predictable policy environment within the internal market that increases information cost for key transport actors and hinders cost-effective implementation of zero-emission fleet transitions. Moreover, diverging national action may disadvantage fleets operating across borders and limit the efficient allocation of zero-emission vehicles in the internal market. These challenges cannot be effectively solved by individual Member States acting alone.

3.3.Subsidiarity: Added value of EU action

EU-level action will ensure market certainty and demand for zero-emission vehicles from corporate fleet operators, helping companies operating in multiple Member States, thus creating a predictable demand signal for vehicle manufacturers and charging infrastructure providers. It would also support more equitable access to zero-emission vehicles across Member States and facilitate more efficient achievement of EU-wide climate targets. 216 respondents to the CfE (45.4%) emphasise that firm EU signals would strengthen European manufacturing and supply chains, support job creation, and sustain industrial leadership in zero-emission technologies. Furthermore, existing EU-level supply-side measures (CO2 emission performance standards for road transport vehicles) would be complemented more effectively by demand-side measures taken at the same level than by national measures. EU-level action can also ensure a faster impact on the market, thanks to clearer and harmonised market signal. This is of crucial importance given the urgent need to safeguard the competitiveness of the EU automotive industry and the need to accelerate the uptake of zero-emission vehicles in second-hand markets in the EU.

4.Objectives: What is to be achieved?

4.1.General objectives

In view of the problems identified in section 2, the general objective of the initiative is to support the decarbonisation of the EU road transport sector, while safeguarding the competitiveness of the European automotive industry and ensuring a fair transition. This is coherent with other EU transport decarbonisation policies, contributes towards SDG 13 ‘Take urgent action to combat climate change and its impacts’ and indirectly supports Sustainable Development Goal (SDG) 3 ‘Ensure healthy lives and promote well-being for all at all ages’. A shift towards zero-emission road transport is essential to contribute towards the economy-wide 55% greenhouse gas emissions reduction target for 2030, the proposed climate target for 2040 89 , and achieve climate-neutrality by 2050, in line with the European Climate Law 90 . It is also essential for the future growth and global competitiveness of the EU automotive sector, as highlighted in the Clean Industrial Deal 91 and the Industrial Automotive Action Plan 92 .

4.2.Specific objectives

Each of the three specific objectives of the initiative are designed to address the two problems and the two problem drivers described in section 2. They complement each other to help achieve the general objective:

-SO1: Stimulate the demand for ZEVs in the corporate segment. This specific objective addresses problem drivers 1 and 2. It aims to ensure a consistent framework across the EU for the uptake of corporate ZEV, reducing the current fragmentation, while providing certainty and thus promoting the competitiveness of the EU automotive industry. It complements the supply-side instruments of the CO₂ standards for light- and heavy-duty vehicles and the Alternative Fuels Infrastructure Regulation, which addresses the rollout of recharging and refuelling infrastructure in the EU.

-SO2: Reduce fossil fuels expenditures in the road transport sector. This specific objective, addressing problem drivers 1 and 2, aims to ensures a higher reduction of fossil fuels consumption through a faster deployment of ZEVs in corporate fleets. Because of their higher yearly mileage compared to private vehicles, corporate ZEVs are expected to bring higher fossil fuel savings, contributing to road transport decarbonisation and competitiveness thanks to the lower TCO of corporate ZEVs compared to conventional corporate vehicles.

-SO3: Accelerate the ZEV availability on the second-hand market. This specific objective aims to render ZEVs more affordable, in particular for citizens and SMEs. The lower purchase price of second-hand ZEVs can offer opportunities to switch to this option for a significantly higher number of citizens and transport operators, allowing them to benefit from their lower TCO compared to conventional vehicles 93 . Furthermore, by increasing the availability of second-hand ZEVs across the EU, this specific objective helps making them more affordable through intra-EU trade also in those Member States where the second-hand vehicle market is predominant and national incentives are not sufficient to make new ZEVs competitive, thus contributing to a more balanced progress towards road transport decarbonisation across the EU. 

Figure 2: General and specific objectives and their links to problem drivers

Source: European Commission

SO1, SO2 and SO3 are interrelated. However, it should be noted that SO1 could be fully achieved at the same time with a partial achievement of SO2 and SO3, or at the same time with their full achievement. This depends on the type of fleets for which an increase in ZEV is required. For example, if the increase in ZEVs required to meet SO1 would take place exclusively in true fleets such as taxis and ride-hailing, this would contribute significantly to SO2 (due to the high mileage of those vehicles) but only to a limited extent to SO3 (taxis are not among the corporate fleets that reach the second-hand market fastest, although they still do so faster than private cars). Conversely, if SO1 would be achieved exclusively through an increase in ZEVs in rental cars, the contribution to SO3 would be significant (because of the very fast turnover to second-hand market), but the contribution to SO2 would be more limited (because their yearly mileage is lower than that of taxis).

The three specific objectives further contribute to ensuring the achievement of the general objective of the initiative: to support the decarbonisation of the EU road transport sector, while safeguarding the competitiveness of the European automotive industry and ensuring a fair transition. In this context, EU content requirements are expected to contribute towards the achievement of the general objective by safeguarding the competitiveness of the European automotive industry. However, it should be noted that this is a targeted initiative and other initiatives under preparation, such as the Industrial Accelerator Act, are better placed for addressing the competitiveness of the European automotive industry.

5.What are the available policy options?

5.1.What is the baseline from which options are assessed?

Section 2.1 identifies two main problems, namely the low uptake of ZEV in corporate fleets (cars, vans and lorries) and the insufficient availability of affordable zero-emission vehicles on the second-hand market, which is the primary mean of vehicle purchase for SMEs and citizens. Despite differences among subcategories (e.g. leasing fleets, company cars, and true fleets), the share of zero-emission vehicles in corporate fleets remains low at close to 17% of new registrations for cars, 8% for vans and 3.7% for lorries in the first half of 2025 94 .

As explained in section 2.1, corporate fleets are very important for conditioning ZEV registrations in the EU as they are responsible for 58% of new registrations of cars, around 90% of vans and virtually all new registrations of lorries. A substantial strengthening of demand for ZEVs from corporate fleets is needed to provide greater certainty about the level of demand for ZEVs that manufacturers can expect from these market segments, that are capable of a faster and more efficient transition. The 2030 targets under the CO2 standards for cars, vans and lorries require an accelerated uptake of zero-emission vehicles in the next years. Without further regulatory intervention at the EU level that enables clear market direction for the uptake of zero-emission vehicles in corporate fleets at national level, the potential of the corporate vehicles to contribute to the necessary demand will remain underexploited. Section 2.3 explains that although the problems are expected to subside over time, without EU level action, problem 1 is likely to remain relevant until 2035 for cars and vans and at least until 2040 for lorries, while problem 2 is likely to persist until 2030-2035 for new cars, vans and lorries and at least until 2036 on the second-hand market (because of the time gap between vehicles first registration and availability on the second-hand market).

In line with the Better Regulation toolbox (Tool #60), the baseline has been designed to include the initiatives of the ‘Fit for 55’ package 95 and the proposed amendment of the European Climate Law to include a 2040 climate target for the EU 96 , of reducing the EU's net greenhouse gas emissions by 90% by 2040 relative to 1990, with a limited contribution towards the 2040 target of high-quality international credits of 3% of 1990 EU net emissions. It also reflects the revised CO2 emission performance standards for heavy-duty vehicles 97 , the new Euro 7 standards 98 , the revised TEN-T Regulation 99 , as well as the initiatives part of the Greening Freight package 100  and Roadworthiness package 101 . It also reflects the National Energy and Climate Plans prepared by the Member States under the Regulation 2018/1999 on the Governance of the Energy Union and Climate Action and submitted to the Commission during 2024-2025. The baseline scenario assumes no further EU level intervention beyond the current fragment support framework at national level for corporate ZEV. More details on the baseline scenario assumptions and results are provided in Annex 4 (section 2).

The baseline also incorporates perspectives on potential future developments captured in the 2022 Strategic Foresight Report 102 and during a foresight workshop organised by DG MOVE and JRC on 10 February 2025, analysing the impacts of the megatrends and drivers of change on the EU transport sector 103 . In particular, the projected transport activity draws on the long-term population projections from Eurostat and GDP growth from the Ageing Report 2024 104 .

In the baseline scenario, EU transport activity is projected to grow post-2020, following the recovery from the COVID-19 pandemic. Road transport would maintain its dominant role within the EU by 2050, despite its lower modal share over time. Road passenger transport activity (expressed in passenger-kilometres) 105 is projected to grow by 7% between 2015 and 2030 (15% for 2015-2050), while road freight transport activity (expressed in tonne-kilometres) 106 by 32% during 2015-2030 (52% for 2015-2050). Transport activity for rail is projected to grow significantly faster than for road, driven in particular by the completion of the TEN-T core network by 2030 and of the comprehensive network by 2050, supported by the Connecting Europe Facility 107 , Cohesion Fund and ERDF funding, but also by measures of the ‘Fit for 55’ package 108 and the Greening Freight package.

The share of ZEV in new registrations for corporate cars is projected to increase from 17% in 2025 to 31% in 2029 and 61% in 2030, while for vans from around 8% in 2025 to 30% in 2029 and 52% in 2030 109 . From 2035, all new light-duty vehicles (cars and vans) must achieve zero tailpipe emissions due to the CO2 emission standards regulation, and thus the share of ZEV in new registrations of cars and vans is 100%. For lorries (virtually all corporate), the new registrations of ZEV are projected at around 7% in 2029, 24% in 2030 and going up to 77% by 2050 in the baseline scenario. Taking into account the payload weighting factors under the CO2 emission performance standards 110 , the new zero-emissions registrations for regulated lorries are projected at 9% in 2029, 30% in 2030 and around 90% by 2050.

The share of ZEV in the overall cars fleet is projected at 13% in 2030, going up to 83% in 2050 in the baseline scenario, while for vans at 10% in 2030 and 82% in 2050, and for lorries at around 2% in 2030 and 48% in 2050 (around 2% in 2030 and 57% in 2050 taking into account the payload weighting factors under the CO2 emission performance standards). Of this, for corporte cars the share of ZEV is projected at 30% in 2030 and 98% in 2050, due to the shorter initial ownership duration and faster turnover of the corporate vehicles. For corporate vans, which represent around 90% of the total, the share of ZEV in the fleet is projected at 11% in 2030 and 84% by 2050. These developments are mainly driven by the CO2 standards Regulation, supported by the Alternative Fuels Infrastructure Regulation and incentives for ZEV at national level, in line with State aid rules, if applicable. NOx emissions from road transport are projected to reduce by 72% in 2030 relative to 2015 (99% reduction for 2015-2050), while particulate matter (PM2.5) emissions would decrease by 48% in 2030 relative to 2015 (95% reduction for 2015-2050).

In line with the Better Regulation toolbox, the baseline assumes that all legislation in place and proposed by the Commission is fully implemented, including the ETS2 which caps the emissions from road transport and buildings, and the Renewable Energy Directive setting targets for renewable energy in transport as well as mandates for renewable fuels of non-biological origin (RFNBO) and advanced biofuels. Vehicle manufacturers are assumed to comply with the CO2 emission performance standards for new vehicles throughout the time horizon considered. Member States and transport operators also comply with other requirements included in the existing legislation. The EU climate targets for 2030, 2040 and 2050 are met in the baseline and the CO2 emissions from road transport are projected to decrease by 27% by 2030 relative to 2015, and be close to zero by 2050, thanks to the large-scale uptake of zero-emission vehicles and some use of renewable and low-carbon fuels.

Driven by the recovery of the transport activity following the COVID-19 pandemic, the most recent available statistics (for 2023) show no progress in the reduction of CO2 emissions from road transport relative to 2015. In case vehicle manufacturers do not meet their CO2 emission targets, or Member States and transport operators do not fully comply with other legal requirements, or consumers delay the acquisition of new vehicles, the reduction in the CO2 emissions from road transport would be lower than projected in the baseline. In this case, other transport modes (where emissions are harder to abate) or other sectors would need to deliver higher emission reductions to meet the EU climate targets for 2030, 2040 and 2050. However, as explained above, in line with the Better Regulation toolbox, the baseline assumes the implementation of existing policies.

In addition, in the baseline the benefits of higher uptake of ZEV by large companies remain untapped. As corporate vehicles typically have comparatively high yearly mileage, their higher uptake increases the potential impact on real-world emissions reductions.

5.2.Description of the policy options

5.2.1.Possible policy options and preliminary screening of options

As a first step, a comprehensive list of possible policy measures and options was established after consultations with stakeholders, expert meetings, and the Commission’s own analysis. This list was subsequently screened based on the likely effectiveness, efficiency and proportionality of the proposed measures in relation to the given objectives, as well as their legal and technical feasibility.

5.2.2.Discarded policy options

Based on internal assessment and on information received in the context of the CfE and targeted stakeholder consultations, several options have been discarded. This includes setting mandatory targets for the minimum share of ZEV in all corporate fleets above a certain size. In such option all companies would be required to report on the number of vehicles they owned each year, and those owning more than a certain number of vehicles would need to ensure that a minimum share of those are ZEV. This option was not considered proportionate due the very high administrative costs and the risk of imposing stringent targets on fleets for specific use cases where the ZEV availability is still limited; for example, fleets with specific use cases and operational requirements which are not yet met by ZEV models currently available on the market might be unable to meet the mandatory share of ZEVs.

The setting of mandatory targets for the minimum share of ZEVs in specific types of corporate fleets (e.g. leasing or taxis) was also discarded on the basis of insufficient internal consistency, due to the very high risk of unintended consequences and avoidance action. For example, setting mandatory targets on leasing fleets might lead some operators and clients to shift from vehicle leasing to other financial solutions, or result in clients with a preference for conventional vehicles to decide to purchase rather than lease a vehicle. Setting mandatory targets for taxi companies and/or ride-hailing companies that own the vehicles of their fleet might damage their competitiveness compared to ride-hailing companies using a higher share of their drivers’ private vehicles. This option was expected to show low effectiveness as a result of the limited scope, as a result of covering only some types of corporate fleets.

Voluntary commitments by large shippers and large fleet operators to meet a minimum share of zero-emission vehicles by a given date were also discarded, because they were considered insufficient to address the identified problems and problem drivers. Another discarded option was a Commission Recommendation on the taxation of corporate vehicles i.e. providing favourable fiscal treatment of zero-emission corporate vehicles compared to conventional ones, given that suggestions on fiscal levers were already presented in Decarbonise Corporate Fleets Communication 111 in March 2025.

The possibility of particularly requiring vehicle-to-grid (V2G) capability for corporate vehicles in scope was also discarded as at this stage of development it was not considered proportionate and efficient, given that parts of the required technical specifications on the vehicle side are not yet standardised 112 , this capability is not widely implemented on electric vehicles on the market, and there is no technical requirement for electric vehicle manufacturers to include it in vehicle type-approval documentation. Furthermore, vehicle-to-grid capability requirements would be very difficult to implement in the context of this proposal, and importantly, may interfere with other relevant legislative frameworks in this field (e.g. EU type approval legislation). The benefits of such requirement would vary significantly from one fleet to another, depending on the type of vehicle and its use case.

Other options were discarded due to the higher administrative costs and comparable benefits to some of the retained options, or insufficient internal and/or external coherence in relation to e.g. the CO2 emission performance standards for heavy-duty vehicles 113 . Annex 7 provides an overview of all options discarded and a justification for not retaining them.

5.2.3.Retained policy options 

Two main groups of policy options have been retained for further analysis (PO1 and PO2), each including three different levels of ambition for the uptake of zero-emission cars, vans and lorries. The two groups of policy options were designed to address all problem drivers and specific objectives.

The analysis of possible options and inputs from stakeholders highlighted the need to maintain sufficient flexibility and avoid the risk of imposing mandatory targets on individual fleets. Both groups of policy options address this by not targeting directly individual fleets, but providing key enablers for the corporate fleets transition to ZEVs: the first group of options (PO1) sets targets for Member States, enabling clear market direction which will require Member States to activate key national policy levers such as incentives for ZEV uptake in corporate fleets through differentiated vehicle and income taxation or e.g. favourable road charging regimes, if such measures are not in place already. Under this group of options Member States retain full flexibility for the implementation pathway under the binding overall target, leaving hence greater initial uncertainties about different regulatory approaches at national level, but ensuring greater flexibility and minimising the risk of imposing strict targets on specific fleets whose operational requirements cannot yet be met with ZEVs. The second group of options (PO2) follows the same approach for cars and vans but mobilises demand for ZEV trucks through a binding target on minimum shares of ZEVs in transport activities of large companies, thus addressing certain companies directly, which increases certainty of the implementation pathway, while still not directly setting mandatory targets for individual transport operators. This approach aims to provide certainty of demand from large shippers for freight transport services performed through ZEVs; it relies on this guaranteed demand from shippers to push transport operators to increase the share of ZEVs in their fleets.

Both groups of policy options (PO1 and PO2) consider the same approach for cars and vans, with national targets set on Member States for the share of zero-emission cars and vans in yearly new corporate vehicles registrations by large companies in their territory. PO1 and PO2 also consider the same three different levels of ambition for cars and vans. The difference between PO1 and PO2, as explained above, comes from the approach for lorries. While PO1 uses the same design for lorries as for cars as vans (with national targets set on Member States for the share of zero-emission lorries in yearly new corporate vehicles registrations by large companies in their territory), in PO2 large companies will need to ensure that a certain share of the tonne-km of activity performed on their behalf with lorries is performed with ZEVs. Large companies are in the focus of PO2 due to their comparatively stronger ability to accelerate the transition to zero-emission lorries. However, all transport activity performed on behalf of large companies is in the scope of PO2, including own activity, direct sub-contracting and indirect sub-contracting as explained below.

PO1 is expected to address all problems and problem drivers, without imposing disproportionate burdens on market actors. PO1 was designed taking into account the trade-off between expected impacts and flexibility in view of a highly diverse market structure and use cases. Options going beyond the kind of national targets foreseen by PO1, and setting mandates for individual fleets or operators might better ensure that the objectives are met, but they would not provide sufficient flexibility. Additionally, they carry significant risks of unintended consequences, including setting targets that cannot be met by certain operators with specific requirements and use cases, and would be expected to result in significant administrative burden. On the one hand, it was considered that the approach of setting the mandate not directly on the fleet operators, but on shippers (in PO2), would reduce the extent of some of those risks, by creating stable demand for freight activity performed by ZEV rather than a direct mandate on individual SMEs performing transport services. Unlike the options setting targets on specific operators or fleets, that were discarded, the setting of shippers’ mandates in PO2 was explicitly and repeatedly supported by some key stakeholders and noted in some of their submissions to the CfE 114 . For this reason, it was deemed necessary to retain this option for lorries and assess its impacts. 

PO1 and PO2 are expected to lead to a more balanced contribution towards the achievement of SO1 (Reduce fossil fuels expenditures in the road transport sector), SO2 (Reduce fossil fuels expenditures in the road transport sector) and SO3 (Accelerate ZEV availability on the second-hand market) than other discarded policy options.

Table 2 presents the key elements of each policy option, together with the associated specific objective and the problem driver they address, while the policy options are described in detail below.

Table 2: Overview of the key elements of the policy options

Policy option 1 (PO1) sets binding minimum targets for Member States on the share of zero-emission vehicles (cars, vans and lorries) in yearly new corporate vehicles registrations by large companies in their territory.

PO1 will require each Member State to ensure that, starting from 2029, a certain share of new registrations of corporate cars, vans, and lorries by large companies in its territory during that year is zero-emission. Corporate vehicles registered by SMEs are hence not included in the scope.

In order to meet these national targets, Member States will have to put in place measures to increase the demand of corporate ZEVs from large companies, thus contributing to SO1 (Stimulate the demand of ZEVs in the corporate segment). The design of the measures is under the discretion of the Member State. The resulting increase in the share of ZEVs in corporate fleets with a high yearly mileage, such as true fleets, contributes to SO2 (Reduce fossil fuels expenditures in the road transport sector). At the same time, PO1 addresses SO3 (Accelerate ZEV availability on the second-hand market) by accelerating the deployment of ZEVs in corporate fleets with a shorter first ownership period, such as rental and leasing fleets, and vehicles registered by vehicle manufacturers. The additional ZEVs in those fleets are expected to rapidly reach the second-hand market (either as sales or as second leasing), increasing the availability of ZEV options for citizens and businesses relying on second-hand vehicles.

The minimum national targets are set at different levels of ambition for cars, vans, and lorries, to reflect the different level of technology and market development, as well as the differences in targets for the respective vehicle categories under the CO2 emission performance standards. It is also necessary to take into account the specific situation and characteristics of different Member States, in relation to both their economy’s ability to address the higher initial capital costs of ZEVs, and the level of ZEV deployment in their vehicle registration. However, this consideration needs to be balanced with the need to avoid undue market distortion. Cars and vans are primarily used within the Member State where they are registered, and the markets for vehicles and services are mostly segmented by Member State 115 . For these vehicles, the level of ambition set for the EU as a whole can be modulated across Member States. The target for each Member State is calculated starting from the overall EU target, modulated on the basis of the share of ZEV in new registrations in each Member State in 2024 and the GDP per capita, with equal weighting. GDP per capita is considered a good proxy for the economic capacity of operators within Member States to afford higher capital costs of ZEVs, while the share of ZEVs in new registrations represents a proxy for the presence of the necessary enabling conditions (vehicle availability, deployment of recharging infrastructure).

For each Member State, the distance from the EU average was calculated for both GDP per capita and the share of ZEVs in new registrations in 2024. The average between those two factors was then calculated, giving them equal weighting.

Table 3: Calculation of modulation factors for Member States

To ensure balanced development and minimise market fragmentation, while still reflecting differences between Member States, modulation factors were applied to Member States on the basis of the resulting calculation, as provided in the table below.

Table 4: Distance from the EU average and the modulation factor

On the other hand, international transport represented 38.7% of road freight transport in 2023, expressed in terms of tonnes-kilometres 116 . Setting differentiated national targets for these vehicles would carry a significant risk of distorting the market, by encouraging the registration of new vehicles used for this purpose in Member States with lower levels of ambition. For these vehicles, therefore, this option foresees the same level of ambition across all Member States.

For lorries, it is also necessary to refer to the payload weighting factors under the CO2 emission performance standards, so that different sub-groups 117 are counted correctly for the purpose of meeting the targets. This is necessary to ensure that the proposal effectively contributes to transport emission reductions and helps vehicle manufacturers meet the CO2 emission performance standards targets.

In order to ensure compliance with the targets, Member States will review their policy mix and adopt measures that can stimulate a quick market response. They will have flexibility to promote a faster shift to ZEV in corporate vehicles by reducing ZEV’s TCOs through fiscal and financial incentives, as well as by improving operational conditions (e.g. ensuring higher availability of recharging points at key locations), thus effectively reducing operation costs, or by setting mandatory targets for specific entities. They will be able to use any measures they deem necessary to this aim, including e.g. modifying the taxation of corporate vehicles in favour of ZEVs, more favourable road tolling, introducing requirements in licencing for specific passenger transport services (e.g. taxis, ride-hailing), improving enabling conditions such as availability of dedicated recharging points at specific locations or preferential access to parking. Because the targets are set on Member States, and they have different measures available to stimulate ZEVs in corporate fleets, this approach is not expected to lead to the kind of unintended consequences that would result from strict mandatory targets on individual entities – such as a greater use of sub-contracting or as switch between leasing and ownership – but to Member Stats primarily taking measures to make it more economically convenient to switch to ZEVs. Even in the case of Member States deciding to set mandatory targets for specific types of companies or fleets, however, the risk of potential indirect and unexpected impacts can be considered lower than for target setting at European level. National authorities have a better understanding of the fleets operating on their territory, as the complexity is lower and information and data are more easily available, and they can make full use of existing monitoring and reporting schemes – for example in the context of their fiscal system – to minimise the additional administrative burden.

Monitoring and reporting will be ensured directly by the Member States, by extracting the relevant data from their vehicle registries and submitting it yearly to the Commission, and further addresses SO1 (Stimulate the demand of ZEVs in the corporate segment). While Member States are already able to differentiate corporate from private vehicles in their registry, the exclusion of corporate vehicles registered by SMEs would require a one-off adaptation of Member States’ registries. This reporting will be performed in the framework of the the central register for CO2 standards for vehicles maintained by European Environment Agency (EEA). There will be no need for companies to submit any reports to public authorities.

The three sub-options of policy option 1 (PO1A, PO1B and PO1C) are only different in terms of the levels of ambition for the targets for cars, vans and lorries. All other elements are the same. The EU level targets for PO1A, PO1B and PO1C are provided in the tables below, while the modulated targets for cars and vans for different Member States are included in Annex 8.

Policy option 1A (PO1A): low ambition for the targets for cars, vans and lorries

Table 5: Minimum target level for ZE new corporate vehicle registrations by large companies in PO1A (*modulated by Member State)

Policy option 1B (PO1B): medium ambition for the targets for cars, vans and lorries

Table 6: Minimum target level for ZE new corporate vehicle registrations by large companies in PO1B (*modulated by Member State)

Policy option 1C (PO1C): high ambition for the targets for cars, vans and lorries

Table 7: Minimum target level for ZE new corporate vehicle registrations by large companies in PO1C (*modulated by Member State)

Policy option 2 (PO2) sets binding minimum targets for Member States on the share of zero-emission cars and vans in yearly new corporate vehicles registrations by large companies in their territory, and a binding minimum target for the share of zero-emission lorries in large companies’ transport activities.  

For cars and vans, PO2 follows the same approach as PO1, with national targets set on Member States for the share of zero-emission cars and vans in yearly new corporate vehicles registrations by large companies in their territory. For lorries, however, PO2 applies directly to all large companies (companies with at least 250 employees and EUR 50 million turnover) 118 , irrespective of their economic field of activity (i.e. 54,219 large companies 119 ). These companies will be required to report yearly the total road freight transport activity performed on their behalf – both by their own lorries and by direct and indirect sub-contractors – in tonne-km, and ensure that a minimum share of that activity has been performed with zero-emission lorries. 

PO2 addresses SO1 (Stimulate the demand of ZEVs in the corporate segment) by requiring each Member State to ensure that, starting from a given year, a certain share of new registrations of corporate cars and vans by large companies in its territory during that year are zero-emission, and by creating demand by large companies for freight transport services performed with ZEV. By increasing the share of ZEVs in logistics fleets and other corporate fleets with a high yearly mileage, PO2 will contribute to SO2 (Reduce fossil fuels expenditures in the road transport sector). At the same time, it will also address SO3 (Accelerate the ZEV availability on the second-hand market) by accelerating the deployment of ZEVs in corporate car and van fleets with a shorter first ownership period, such as rental and leasing fleets, and vehicles registered by vehicle manufacturers.

Large companies will need to ensure that a certain share of the tonne-km of activity performed on their behalf with lorries is performed with ZEVs. Large companies are in the focus of this option due to their comparatively stronger ability to accelerate the transition to zero-emission lorries. All transport activity performed on behalf of a large company is in the scope, including:

·Own activity: all freight transport activity performed by lorries operated directly by the company. The company will record every tonne-km of activity performed by each of its lorries, and it will yearly report the total activity and the share of this activity performed by ZEVs.

·Direct sub-contracting: all freight transport activity performed by lorries operated by a sub-contractor on behalf of the company, irrespective of whether the sub-contractor is itself a large company or an SME. Every sub-contractor will record every tonne-km of activity performed by each of its lorries, attribute it to the relevant client (e.g. in the case of a lorry transporting goods for different clients, the activity in tonne-km will have to be split correctly between the different clients) and report it to the client.

·Indirect sub-contracting: all freight transport activity performed by lorries operated by a sub-contractor of a company working directly or indirectly on behalf of the large company, irrespective of whether the sub-contractors are large companies or an SME themselves 120 . Every sub-contractor will record every tonne-km of activity performed by each of its lorries, attribute it to the relevant client (e.g. in the case of a lorry transporting goods for different clients, the activity in tonne-km will have to be split correctly between the different clients), and report it to the client, who in turn will report it to its client, until the report reaches the large company that is directly in the scope.

Most large companies perform a relatively low share of their road freight transport activity through own fleets and generally rely on sub-contracting for the vast majority of their freight transport needs 121 . In order to meet their target, large companies will therefore need to ensure not only a certain share of ZEVs in their own fleet, but also that a certain share of the activity they procure – directly or indirectly – is performed by ZEVs. To this aim, they will effectively need to ensure that their direct and indirect sub-contractors, the vast majority of which are SMEs and micro-enterprises 122 , have in their fleets the number of zero-emission lorries needed for complying with the targets for their transport activities. This option therefore impacts the whole road freight transport sector, while it sets the legal obligation only for large companies. 

For the purpose of reporting, the share of freight transport activity performed on behalf of large companies, PO2 refers to the rules set out in the context of corporate sustainability reporting 123  to determine how different legal entities have to be considered (e.g. legal entities under ownership/control of another legal entity, different legal entities under the same ownership, franchises, subsidiaries across different Member States, different legal entities belonging to the same group, etc.). These rules need to ensure that all parts of a company, including all local branches across different Member States, are covered, and that no double-counting occurs across Member States.

All transport companies, including SMEs, that directly or indirectly provide freight services by lorry to large companies will need to monitor and report their activity in terms of tonne-km performed by type of vehicle, in order to allow the large company to monitor and report compliance with its target. In practical terms, every company providing freight transport services to a large company in scope will therefore be required to report the precise tonne-km of the service performed, and the share of those tonne-km performed with ZEV, taking into account both the transport services performed directly by its own trucks and drivers, and those it has sub-contracted to another entity. Where the transport activities of a large company rely on multiple layers of sub-contracting, which is a common business practice, each sub-contractor will need to collect and consolidate the relevant information from its own sub-contractors, and report it to its clients. The large company will then consolidate data provided by all its sub-contractors in a report to be submitted to the relevant Member State.

Because the target is set in terms of tonne-km, neither the large company nor the sub-contractors need to use specific methodologies to calculate the fuel consumption or greenhouse gas emissions linked to specific transport activities. The data to be collected and reported is limited to the tonne-km of activity and whether the lorry that performed it is a ZEV.

For cars and vans, Member States will have to report the share of ZEV in new corporate vehicle registrations by large companies in the same was as for PO1. For lorries, they will also be required to compile reports from all large companies established on their territory and submit them yearly to the Commission. Monitoring enforcement will be performed based on sample verification of the correctness of companies’ reporting. Member States’ reports will be submitted in the framework of the central register for CO2 standards for vehicles maintained by EEA, which will face limited costs to expand and manage the database.

The three sub-options of policy option 2 (PO2A, PO2B and PO2C) are only different in terms of the levels of ambition for the targets for cars, vans and lorries, as described below. All other elements are the same.

Policy option 2A (PO2A): low ambition for the targets for cars, vans and lorries

For cars and vans, the PO2A targets are the same as PO1A targets, while for lorries the targets are for large companies on the share of their freight activity performed by zero-emission lorries in tonnes kilometre.

Table 8: Minimum target level for ZE new corporate vehicle registrations by large companies in PO2A (*modulated by Member State)

Policy option 2B (PO2B): medium ambition for the targets for cars, vans and lorries

For cars and vans, the PO2B targets are the same as PO1B targets, while for lorries the targets are for large companies on the share of their freight activity performed by zero-emission lorries in tonnes kilometre.

Table 9: Minimum target level for ZE new corporate vehicle registrations by large companies in PO2B (*modulated by Member State)

Policy option 2C (PO2C): high ambition for the targets for cars, vans and lorries

For cars and vans, the PO2C targets are the same as PO1C targets, while for lorries the targets are for large companies on the share of their freight activity performed by zero-emission lorries in tonnes kilometre.

Table 10: Minimum target level for ZE new corporate vehicle registrations by large companies in PO2C (*modulated by Member State)

In relation to problem driver 1, PO1 and PO2 define a clear target structure that ends the fragmentation and provides clear market direction at national level. As a consequence of having to ensure compliance with the targets, Member States will have to review their policy mix and adopt measures that can stimulate a quick market response. In this context, experience from Member States with more mature zero-emission corporate fleet markets will inform the policy choices in other Member States and lead to a greater coherence of the policy mix across the Member States. The 2024 OPC clearly underlined the relevance of fiscal and financial incentives for the transition to clean corporate fleets. However, in full respect of subsidiarity and proportionality, PO1 and PO2 do not intend to harmonise the national support measures, but rather to provide clear market direction for support of clean corporate fleets.

In relation to problem driver 2, in PO1 for cars, vans and lorries and in PO2 for cars and vans, Member States have flexibility to promote a faster shift to ZEV in corporate vehicles by reducing ZEV’s TCOs through fiscal and financial incentives, as well as by improving operational conditions (e.g. ensuring higher availability of recharging points at key locations), thus effectively reducing operation costs. The Communication “Decarbonising Corporate Fleets” 124 presented a series of measures that Member States can take to address these operational constraints. The setting of national targets will foster all Member States to make better use of relevant and proven support measures.

A summary of different stakeholder groups’ views in terms of (a) overall attitude towards the need to act and the ZEV transition in general, (b) ZEV mandates, and (c) vehicle tax/financial incentives is presented below:

·Electric charging and hydrogen refuelling infrastructure providers are generally supportive of the transition towards zero-emission mobility and typically accept mandates, albeit with caveats. They argue that clear demand signals help de-risk infrastructure investments if they are coupled with realistic ramp-up periods. They support incentives accelerating network build-up and fleet uptake (support for capital costs, grid-connection facilitation, targeted operating support in low-utilisation phases). Main concerns relate to charging infrastructure scale-up and reliability, grid-side bottlenecks (grid capacity and energy supply), and policy design to streamline permitting and connection. A number of stakeholders in this group underscore the positive case for incentives/tax measures crowding-in private investment.

·Civil society representatives tend to favour incentives that are targeted and time-limited, particularly those that are CO2-based or removing preferential treatment for non-ZEVs, to avoid rewarding high emitters. Their reasons centre on climate urgency, public-health benefits, and consumer protection, while acknowledging the need for support measures (i.e. for lower-income users and SMEs) and infrastructure readiness. Main concerns relate to the ambition and design of mandatory targets (ensuring environmental effectiveness while preventing loopholes), coupled with the need for reliable, widely-available recharging infrastructure and incentives to accelerate adoption of ZEV without regressive impacts.

·Companies using transport and logistics services are more cautious or negative towards fleet mandates, with many arguing that binding quotas would transfer risks to buyers without solving operational bottlenecks, such as limited range, recharging time, or infrastructure availability. Some could conditionally support mandates if targets would be progressive, with sectoral flexibility. On incentives, there is conditional support for instruments that lower total cost of ownership (e.g., tax depreciation, toll relief, bonus–malus system linked to CO₂ emissions), provided they are predictable and technology-neutral. Main concerns relate to the charging availability/reliability as well as upfront risks for total cost of ownership. Operational planning and depot readiness also features strongly, where companies manage on-site charging for contractors or captive fleets.

·Final customers (road transport passengers, private companies for their employees), appear frequently critical of the ZEV transition and object to strict mandates or avoid taking a firm position. They lean towards incentives where these are customer-oriented (purchase grants, tax credits, toll exemptions) but warn against regressive designs. Main concerns relate to charging availability/reliability as well as total cost of ownership. They also share concerns about second-hand/residual values of company cars.

·Financial institutions and leasing stakeholders are sceptical and take critical positions on mandates. They view incentives favourably when these reduce financing risk (e.g., credit guarantees, depreciation rules, insurance/tax treatment that recognises lower running emissions). Main concerns relate to residual value of vehicles and second-hand market depth, which is a driver for pricing of leases and risks. They also share concerns on upfront risks and uncertainty related to total cost of ownership. They call for policy predictability to reduce risk premia and avoid abrupt changes stranding contracted fleets. In particular, leasing companies call for stable incentives and taxation rules.

·Logistics services companies show mixed to negative reactions to mandates and suggest that, if mandates are introduced, there should be derogations for specific duty cycles and realistic timelines targeting heavy and long-haul segments. On the other hand, incentives receive support when targeted at depot charging, last-mile operations, and load-factor-sensitive use cases, as well as when cross-border tolling/taxation is harmonised. Main concerns relate to operations: charging availability/reliability, technology suitability (range/payload for time-critical operations), and depot readiness. Several stakeholders of this group also call for enhanced grid capacity and connection lead times at logistics hubs.

·Public authorities often show support for mandates as a tool to align corporate fleets with climate objectives, with caveats in relation to proportionality, subsidiarity, and administrative feasibility. They tend to favour incentives that are CO2-consistent, temporary, and fiscally responsible, and that avoid distortion across Member States or breaching state-aid constraints. Main concerns relate to policy design and proportionality (workability of targets, data/monitoring burdens) and the need to remove practical barriers to delivery (grid capacity and energy supply, permitting, and public-realm constraints for chargers’ rollout).

·Rental companies are mostly critical of mandates in the short-term, citing utilisation volatility, rapid model turnover, and uncertain residual value of vehicles. They support incentives that defray early-phase costs and stimulate demand (tax treatment, parking/zone access benefits), while calling for robust charging at airports, stations, and city hubs. Main concerns relate to vehicle availability and lead times to replace large fleets, residual value/second-hand markets, charging reliability (particularly for customers without home/depot charging). Many also quote concerns on total cost of ownership due to uncertainties about residual value of vehicles and split benefits (i.e. it is customers rather than rental companies that benefits from lower operation costs).

·Road haulage operators predominantly see mandates as impractical. According to them, if mandates are introduced, substantial flexibilities for heavy-duty, long-haul, and cross-border operations would be necessary. They support incentives when these are aimed at infrastructure along freight corridors and capital costs for vehicles, and energy-price stability. They also ask for technology neutrality for certain segments, such as long-haul lorries. Main concerns relate to technology performance and use-case suitability for heavier/long-haul duty cycles, charging/refuelling infrastructure (including high-power lorry charging), grid capacity at depots, as well as interest in alternative technologies (hydrogen/biomethane).

·Passenger transport companies are broadly supportive of the transition but often critical of the proposed measures. More than one third of respondents from this group would accept mandates with caveats where cities provide enabling conditions (charging access, zone rules, procurement support), while another third is critical of mandates. They favour incentives that reduce downtime and cost (rapid-charging availability, tariff structures, targeted grants for professional drivers). Main concerns relate to charging availability/reliability (as queueing and downtime directly erode earnings), total cost of ownership (high utilisation means small cost differences matter), and policy design (seeking pragmatic timelines/exemptions where infrastructure is not yet mature).

·Vehicle and transport equipment manufacturers (OEMs). This group typically supports mandates, albeit with caveats, favouring predictable, gradual trajectories that align with industry’s planning, supply chains, and type-approval timelines. They support incentives that stimulate early demand, scale supply chains, and accelerate infrastructure (including grid connections), while being negative towards permanent subsidies that distort competition. Main concerns relate to vehicle availability and lead times (supply-chain constraints), and technology suitability across segments. This group requests stable, predictable policy and incentive frameworks to plan production and product roadmaps, and highlight the need for grid capacity and infrastructure rollout certainty to synchronise supply with feasible demand.

The above thematic analysis is predominantly based on the CfE analysis. Section 3 of Annex 2 describes the limited data collection in the context of the OPC done in preparation of the Communication “Decarbonise Corporate Fleets”. This was mainly due to a high share of non-responses across many questions included in the OPC questionnaire.

While a considerable number of replies (483) was submitted as feedback to the CfE, engagement of specific fleet categories was low across the whole stakeholder consultation activities. Many specific fleet categories saw more than 60% of respondents either not answering or expressing no opinion, limiting the usefulness of disaggregated data.

6.What are the impacts of the policy options?

This section summarises the main expected economic, social and environmental impacts of each policy option. The assessment of impacts draws on multiple data sources 125 , including the targeted stakeholders’ consultation and open public consultation, and findings from desk research. The proposed options are assumed to be implemented from 2029 onwards, so the assessment has been undertaken for the 2029-2050 period and covers the EU Member States. Costs and benefits are expressed as present value over the 2029-2050 period, using a 3% discount rate. All costs and benefits are expressed in 2023 prices.

The main model used for developing the baseline scenario and assessing the impacts of the policy options is the PRIMES-TREMOVE transport model by E3-Modelling, a specific module of the PRIMES model. The PRIMES model has a successful record of use in the Commission's energy, transport and climate policy assessments. In particular, it has been used for the impact assessments underpinning the Communication on a 2040 climate target 126 , the “Fit for 55” package (e.g. for the revision of the EU ETS Directive, the Alternative Fuels Infrastructure Regulation, the revision of the Regulation setting CO2 standards for cars and vans, the revision of the Renewable Energy Directive) 127 , the impact assessments accompanying the 2030 Climate Target Plan 128 and the Staff Working Document accompanying the Sustainable and Smart Mobility Strategy 129 , the Commission’s proposal for a Long Term Strategy 130  as well as for the 2020 and 2030 EU’s climate and energy policy framework. It was also used for developing the baseline scenario underpinning the impact assessment accomanying the revision of the Clean Vehicles Directive in 2017 131 .

The assumptions used for developing baseline scenarios that underpin impact assessments in the energy, transport and climate policy ares, are consulted regularly with Member States and other stakeholders in the context of the so-called Reference scenario process. The baseline scenario underpining this initiative builds on the work on the EU Reference scenario process 2025, that is currently ongoing. In this context, the PRIMES-TREMOVE model has been calibrated on the latest available statistics. The macro-economic projections, the energy price projections and the technology assumptions have been consulted with Member States during a meeting of the Reference scenario expert group on 5 June 2024. In addition, bilateral meetings with Member States took place between September 2024 and April 2025 to discuss the national policies to be reflected, based on the updated National Energy and Climate Plans prepared by the Member States under the Regulation 2018/1999 on the Governance of the Energy Union and Climate Action and submitted to the Commission during 2024-2025.

The technology assumptions, that drive the magnitude of the impacts on costs and benefits, are based on a rigorous literature review carried out by E3-Modelling in collaboration with the JRC and building on studies conducted for the Commission and used in previous impact assessments on related topics 132 . Continuing the approach adopted in the long-term strategy in 2018 and for the Reference Scenario 2020, the Commission consulted on the technology assumptions with Member States and stakeholders in 2024. In particular, technology assumptions were discussed with Member States during a meeting of the Reference scenario expert group on 5 June 2024. They also benefited of a dedicated consultation workshop with stakeholders, held on 22-23 October 2024. It should be noted that the technology assumptions consulted, including costs, refer to those related to vehicles but also power generation, production of fuels such as renewable fuels of non-biological origin (RFNBO) and biomass production pathways and costs. These assumptions, together with the policies included in the baseline (e.g. the Renewable Energy Directive), drive the evolution of electricity and RFNBOs prices over the projection period. They also determine, together with the policies assumed, the magnitude of the impacts on capital and fuel costs in the baseline and in the policy options.

The estimates of the total costs and benefits due to this initiative cannot be directly compared to projections of other impact assessments on similar topics (e.g. ETS2, Alternative Fuels Infrastructure Regulation, CO2 standards for cars and vans, Clean Vehicles Directive etc). This is because the policy options of each of these impact assessments are different. However, it should be noted that over time (e.g. in 2020 at the time of the preparation of the EU Reference scenario 2020 133 , in 2023 at the time of the preparation of the impact assessment accompanying the 2040 climate target 134 and more recently in 2024 in the context of the EU Reference scenario process 2025) the technology costs assumptions have been updated in line with the market developments, accounting for lower technology costs for renewable and zero-emission technologies.

The modelling captures the overall adjustment costs and adjustment costs savings for businesses for the implementation of the targets. However, the way the adjustment costs and costs savings are distributed among different operators within a Member State, and what potential further indirect impacts these might have, will depend on what national measures are put in place which is not known at this stage. Therefore, the uncertainty related to the distribution of the costs needs to be acknowledged.

Further details on the methodological approach, together with results by stakeholder group for specific years and by Member State, are provided in Annex 4.

6.1.Economic impacts

This section provides the economic impacts of the policy options on businesses, citizens, national public authorities and the European Environment Agency (EEA). It also provides an assessment of impacts on competitiveness, small and medium enterprises (SMEs), functioning of the internal market and competition, innovation, territorial impacts and digital by default.

6.1.1.Impacts on businesses

This section describes the impacts on affected businesses, which primarily include road transport operators but also vehicle manufacturers, companies making use of transport and logistics services and other businesses (i.e. buyers of goods transported by road).

Impacts on new ZEV registrations. All policy options that set targets on new registrations of corporate vehicles achieve their objectives without significantly affecting the overall level of ambition the CO2 emission standards for vehicles set for vehicle manufacturers, as reflected in the baseline. For cars and vans, the interplay of corporate and private demand is relevant: in all policy options, the higher uptake of ZEV in new registrations by large companies can be compensated by lower uptake by SMEs and citizens (i.e. private buyers) relative to the baseline until 2035, so that manufacturers do not exceed their emission reduction targets 135 . 

As shown in Table 11, the accelerated uptake of zero-emission cars and vans by large companies is highest in PO1C and PO2C (around 995,000 additional zero-emission cars in 2029 and 865,000 in 2030, relative to the baseline, and around 117,000 additional zero-emission vans in 2029 and 104,000 in 2030), due to the higher level of ambition of the targets for large companies in these policy options. From 2035 onwards, all new light-duty vehicles (cars and vans) must achieve zero tailpipe emissions, due to the CO2 emission standards, and thus there is no change in the number of new ZEV registrations relative to the baseline. By design, for cars and vans, the impacts of PO2A, PO2B and PO2C are similar to those of PO1A, PO1B and PO1C, respectively. For lorries, the targets on new ZEV registrations by large companies have the highest acceleration impact in PO1C (around 10,000 additional zero-emission lorries in 2029, 15,000 to 16,000 for 2030-2035 and 6,000 in 2040), driven by the high ambition targets on new registrations. In PO2A, PO2B and PO2C the impact on new ZEV registrations is higher for SMEs 136  than for large companies as the burden is shifted to sub-contractors of large companies (mostly SMEs).

Table 11: Number of ZEV in new registrations by large companies in the policy options relative to the baseline (in thousand vehicles)

Source: Ricardo (2025), Support study; PRIMES-TREMOVE transport model (E3-Modelling)

Impacts on second-hand ZEV markets. All policy options are expected to lead to higher uptake of ZEV in the second-hand market, thanks to the shorter initial ownership duration and faster turnover of the corporate vehicles. The uptake of zero-emission second-hand cars and vans is higher in PO1C/PO2C (1.2 million cars on average per year over 2031-2050 and 193,000 vans) and PO1B/PO2B (899,000 cars and 145,000 vans) relative to PO1A/PO2A (595,000 cars and 104,000 vans), due to the higher number of new ZEV registered by large companies in these options that reach the second-hand market faster (see Table 12). For cars, the main group benefiting of the increase is that of citizens (although SMEs also benefit), while for vans that of SMEs 137 . For lorries, the impact is higher in PO2 (121,000 zero-emission lorries on average per year over 2031-2050 in PO2A, 159,000 in PO2B and 204,000 in PO2C) relative to PO1 (23,000 lorries in PO1A, 34,000 in PO1B and 48,000 in PO1C), due to the broader scope of targets covering large companies’ transport activities. The main stakeholder group benefiting is that of SMEs. The overall increase in the zero-emission second-hand cars, vans and lorries is the highest in PO2C (1.6 million ZEV on average per year over 2031-2050), followed by PO1C (1.4 million ZEV), PO2B (1.2 million ZEV) and PO1B (1.1 million), while PO1A and PO2A result in lower uptake (721,000 in PO1A and 819,000 in PO2A).

Table 12: Number of ZEV in second-hand ZEV markets in the policy options relative to the baseline, expressed as annual average over 2031-2050 (in thousand vehicles)

Source: Ricardo (2025), Support study; PRIMES-TREMOVE transport model (E3-Modelling)

The increase in the zero-emission second-hand cars, vans and lorries, expressed as annual averages over a five-year period relative to the baseline, is provided in Table 13.

Table 13: Number of ZEV in second-hand ZEV markets in the policy options relative to the baseline, expressed as annual averages over 2031-2035, 2036-2040, 2041-2045 and 2046-2050 (in thousand vehicles)

Source: Ricardo (2025), Support study; PRIMES-TREMOVE transport model (E3-Modelling)

Impacts on the uptake of ZEV in the vehicle stock. All policy options are expected to result in overall higher uptake of ZEV in the vehicle stock due to the faster deployment of ZEV in the second-hand markets. For cars and vans, the impact is more pronounced in PO1C/PO2C (around 1.1 million additional zero-emission cars in 2030, 2.5 million cars in 2040 and 1.5 million in 2050, and 111,000 additional zero-emission vans in 2030, 358,000 vans in 2040 and 98,000 in 2050) than in PO1A/PO2A and PO1B/PO2B due to the higher ambition of the targets. For lorries, the uptake of ZEV in the stock is higher in PO2 relative to PO1 for all sub-options due to the broader scope of the targets 138 . Table 14 shows the increase in the number of ZEV in the total stock in the policy options relative to the baseline, of which the increase in the corporate vehicle stock. The reason for the lower increase in the zero-emission corporate cars in the stock post-2040 relative to the baseline is that by 2040 zero-emission cars already represent 85% of the corporate car stock in the baseline.

Table 14: Number of ZEV in the vehicle stock in the policy options relative to the baseline (in thousand vehicles)

Source: Ricardo (2025), Support study; PRIMES-TREMOVE transport model (E3-Modelling)

Impacts on costs and costs savings for businesses. PO2A, PO2B and PO2C are expected to result in one-off and recurrent administrative costs and recurrent enforcement costs for businesses. All policy options would also lead to adjustment costs and adjustment cost savings, as well as to changes in fuel tax expenditures. Table 15 shows the recurrent and one-off costs and costs savings for businesses and Table 16 the one-off costs and costs savings, expressed as present value over 2029-2050 relative to the baseline. Each category of costs and cost savings is discussed below.

Table 15: Recurrent and one-off costs and cost savings for businesses in the policy options, expressed as present value over 2029-2050 relative to the baseline, in billion EUR (2023 prices)

Source: Ricardo (2025), Support study; PRIMES-TREMOVE transport model (E3-Modelling)

Table 16: One-off costs and cost savings for businesses in the policy options, expressed as present value over 2029-2050 relative to the baseline, in billion EUR (2023 prices)

Source: Ricardo (2025), Support study; PRIMES-TREMOVE transport model (E3-Modelling)

One-off and recurrent administrative costs for businesses. The options based on national targets (PO1A, PO1B, PO1C) are not expected to create administrative burden for businesses, as the reporting is done by Member States on the basis of existing national vehicle registers. The potential further indirect impacts these might have, will depend on what national measures are put in place. Member States that will make use of tax policy as the main instrument to achieve the targets will minimise potential indirect negative impacts for businesses. For example, adapting the fiscal and financial incentives for corporate fleets, which have proven very effective for Member States to rapidly increase the share of ZEVs in new corporate registrations, will not result in additional administrative burden for businesses. Similarly, measures to reduce operational constraints of ZEVs will not result in administrative burden for businesses. Even in the case where Member States decide to set mandatory targets for businesses, they have the possibility to ensure the necessary monitoring and reporting through existing national measures and reporting frameworks, for example in the context of taxation, so as to avoid the need to create dedicated reporting and minimise administrative burden. The targets set by France are an example of such measure. Because of national competence on taxation regimes, setting similar targets for businesses at the EU level would result in significantly higher administrative burden than at national level.

In PO2A, PO2B and PO2C businesses will face administrative costs, both one-off and recurrent, since these policy options imply a new reporting activity for lorries. Detailed explanations on the estimation of the administrative costs by Member State are provided in Annex 4 (section 3).

One-off administrative costs are expected for large companies in PO2A, PO2B and PO2C for extending their IT systems to include a relevant field to collect the required data from sub-contractors (i.e. tonne-km of activity performed and whether the lorry that performed it is a ZEV) and for updating the templates for the contracts with the sub-contractors performing transport activities on their behalf. On average, EUR 1,000 per large company is assumed to be needed for extending the IT systems. Considering the number of large companies (54,219) in industry, construction and market services in the EU 139 , the total one-off costs for the extension of their IT systems is estimated at EUR 54.22 million in 2029. In addition, half a day is expected to be needed per company to update the templates for the contracts with the sub-contractors. Assuming 7.2 working hours per day on average 140 and the tariff rates by Member State for the ISCO 3 category (technicians and associate professionals) in 2023 prices 141 , the total one-off costs for updating the templates for the contracts are estimated at EUR 6.24 million in 2029. Thus, the total one-off administrative costs for large companies in PO2A, PO2B and PO2C are estimated at EUR 60.46 million in 2029.

Recurrent administrative costs are expected in PO2A, PO2B and PO2C for both large companies and SMEs for reporting the activity performed (i.e. tonne-km) and whether the lorry that performed it is a ZEV. As explained in section 5.2.3, most large companies perform a relatively low share of their road freight transport activity through own fleets and generally rely on sub-contracting for the vast majority of their freight transport needs 142 . All transport companies, including SMEs, that directly or indirectly provide freight services by lorry to large companies will need to monitor and report their activity in terms of tonne-km performed by type of vehicle, in order to allow the large company to monitor and report compliance with its target to the national authorities.

For large companies, it is assumed that one minute per lorry per working day is needed to report the type of vehicle and activity performed (i.e. tonne-km) for the lorries that they own, drawing on feedback from targeted interviews. Considering the evolution of the number of lorries owned by large companies in each policy option 143 , assuming 220 working days per year and the tariff rates by Member State for ISCO 8 category (plant and machine operators, and assemblers) in 2023 prices 144 , the recurrent administrative costs are estimated at around EUR 22 to 26 million per year in all sub-options (PO2A, PO2B and PO2C). In addition, 5 working days per year are assumed to be needed for collecting data from different parts of the company and from sub-contractors, quality-check, validate, and submit the data to the national public authorities. Using the tariff rates by Member State for ISCO 3 category (technicians and associate professionals) in 2023 prices and the number of large companies, the recurrent costs for collecting the data from different parts of the company are estimated at EUR 62.43 million per year in PO2A, PO2B and PO2C.

For sub-contractors of large companies, based on interviews with industry representatives, 5 minutes per working day per lorry are assumed to be needed to report the type of vehicle and activity performed (i.e. tonne-km). Considering the tariff rates by Member State for ISCO 8 category (plant and machine operators, and assemblers), the recurrent administrative costs for sub-contractors of large companies are estimated at around EUR 2.28 billion in 2029 and 2030, EUR 2.46 billion in 2040 and EUR 2.55 billion in 2050 in PO2A, PO2B and PO2C.

Total recurrent administrative costs for businesses (for large companies and SMEs) are estimated at around EUR 2.37 billion in 2029 and 2030, EUR 2.55 billion in 2040 and EUR 2.63 billion in 2050 for PO2A, PO2B and PO2C. Expressed as present value over 2029-2050, they are estimated at around EUR 41.29 billion in PO2A, PO2B and PO2C, of which EUR 32.13 billion for SMEs. Overall, total one-off and recurrent administrative costs for businesses are estimated at EUR 41.36 billion in PO2A and EUR 41.35 billion in PO2B and PO2C, expressed as present value over 2029-2050, of which EUR 32.13 billion for SMEs in PO2A, PO2B and PO2C.

Recurrent enforcement costs are only expected in PO2A, PO2B and PO2C for cooperating with authorities for verifying the correctness of companies’ reporting. One percent of large companies is assumed to be checked per year on average and the check per company is assumed to take 2 working days. Using the tariff rates by Member State for the ISCO 3 category (technicians and associate professionals), the total recurrent enforcement costs are estimated at EUR 0.25 million per year or EUR 4.1 million expressed as present value over 2029-2050. Details on the enforcement costs by Member State are provided in Annex 4 (section 3).

One-off and recurrent adjustment costs and costs savings for businesses. In all policy options, the businesses within the scope will face one-off and recurrent adjustment costs (i.e. one-off capital costs, recurrent fuel costs and other recurrent operation costs) and adjustment cost savings (i.e. one-off capital costs savings, recurrent fuel costs savings and other recurrent operation costs savings) as a result of the targets. However, the level and distribution of those costs and cost savings differs between options. Details on adjustment costs and costs savings for specific years are provided in Annex 4 (section 5) while details on costs by Member State are provided in Annex 4 (section 7).

In PO1A, PO1B and PO1C the demand of new zero-emission vehicles by large companies is expected to increase relative to the baseline (see Table 11). This is projected to result in higher capital costs for large companies relative to the baseline, but at the same time also in fuel costs savings (due to electrification) and other operation costs savings. The higher uptake of ZEV in the second-hand market (see Table 12 and Table 13), thanks to the shorter initial ownership duration and faster turnover of the corporate vehicles, would result in capital costs savings (due to the lower cost of second-hand vehicles), fuel costs savings and other operation costs savings. In addition, depending on how vehicle manufacturers respond to the increase in demand for new ZEV, different indirect impacts can be expected. The increased demand for new ZEVs by large companies might lead to an increase in the total share of ZEVs in new registrations. Alternatively, vehicle manufacturers might keep the total share of ZEV relatively unchanged compared to the baseline, by reducing the offer of ZEVs in new registrations by SMEs. In this latter case, this might result in reduced availability of ZEVs for SMEs and an increase of fuel and other operation costs compared to the baseline, because of the higher share of new conventional vehicles bought by SMEs relative to the baseline. These costs may be lower if vehicle manufacturers decided to increase the overall share of ZEVs in their new registrations. In the assessment of the options, it is conservatively assumed that manufacturers do not exceed their emission reduction targets relative to the baseline and in the short to medium term SMEs favour new conventional vehicles to new ZEV. This results in lower capital costs and higher fuel costs and other operation costs relative to the baseline. At the same time, SMEs would benefit of the higher uptake of ZEV in the second-hand market, as explained above.

The adjustment costs and costs savings in PO1A, PO1B and PO1C reflect the combined effects described above. Total adjustment costs are estimated at EUR 24.5 billion in PO1A, EUR 32.7 billion in PO1B and EUR 40.8 billion in PO1C (see Table 15), expressed as present value over 2029-2050 relative to the baseline. Around 30% of these adjustment costs in each option (30% in PO1A, 31% in PO1B and 33% in PO1C) are capital costs associated to the uptake of new ZEV by large companies. Fuel costs, related to the uptake of new conventional vehicles by SMEs, represent around 40% of adjustment costs in PO1A, 38% in PO1B and 35% in PO1C, while other operation costs represent another 29% of total adjustment costs in PO1A, 30% in PO1B and 32% in PO1C. Total adjustment costs savings are projected to overcompensate the adjustment costs, and are estimated at EUR 32.9 billion in PO1A, EUR 45.7 billion in PO1B and EUR 59.2 billion in PO1C (see Table 15), expressed as present value over 2029-2050 relative to the baseline. Capital costs savings, due to the uptake of new conventional vehicles by SMEs and higher uptake of second-hand ZEV relative to the baseline, represent around 40% of the total adjustment costs savings (44% in PO1A, 43% in PO1B and 41% in PO1C). As explained above, the higher uptake of new ZEV by large companies and the higher uptake of second-hand ZEV (mostly by SMEs) results in fuel costs savings estimated at EUR 10.5 billion in PO1A, EUR 14.8 billion in PO1B and EUR 19.9 billion in PO1C (32% of the total adjustment costs savings in PO1A and PO1B and 34% in PO1C) 145 . Other operation costs savings due to the higher uptake of new ZEV by large companies and second-hand ZEV, mostly by SMEs, represent another 24% of the total adjustment costs savings in PO1A and 25% in PO1B and PO1C.      

In PO1A, PO1B and PO1C the modelling assumes that the targets at Member State level in terms of share of ZEV in new registrations of corporate cars, vans, and lorries by large companies in their territory during that year are met 146 . The modelling captures the overall adjustment costs and adjustment costs savings for businesses for the implementation of the targets. However, the way the adjustment costs and costs savings are distributed among different operators within a Member State, and what potential further indirect impacts these might have, will depend on what national measures are put in place. Therefore, the uncertainty related to the distribution of the costs needs to be acknowledged. Member States that will make use of tax policy as the main instrument to achieve the targets will minimise potential indirect negative impacts for businesses. If Member States decide to put in place mandatory targets for specific operators or fleet types, on the other hand, this can lead to higher risk of indirect impacts for those operators, for example in terms of favouring one type of operation over another (e.g. leasing over purchase, or ride-hailing platforms over ride-hailing companies with ownership of their vehicle fleet). Even in the case of Member States deciding to set mandatory targets for specific types of companies or fleets, however, the risk of this kind of potential indirect and unexpected impacts can be considered lower than for target setting at European level. National authorities have a better understanding of the fleets operating on their territory, as the complexity is lower and information and data are more easily available, and they can make full use of existing monitoring and reporting schemes – for example in the context of their fiscal system – to minimise the additional administrative burden.  

In most use cases, the TCO of ZEVs is either already competitive with that of conventional vehicles, or only slightly higher – although the initial high investment cost remains a key barrier. In general, ZEVs present a higher initial purchase cost, which can be partly or totally compensated by lower operational costs. However, in cases where they cannot fully meet the specific operational requirements of a given fleet, the operational costs may increase – for example because the vehicle has reduced time in operation because of the need to recharge – which may decrease the competitiveness of their TCO. In cases where the TCO is still higher than that of conventional vehicles, Member States intervention can help make it competitive by reducing initial purchase costs (e.g. through financial incentives such as scrappage schemes or financial support to new purchase), or operation costs either directly (e.g. through reduced annual vehicle taxation) or by ensuring better enabling conditions (e.g. ensuring availability of dedicated recharging points for specific fleets at key locations, such as fast chargers for rental fleets at airports) that will allow a more efficient use of corporate ZEVs. When such measures are in place and result in the TCO of ZEVs being competitive with that of conventional vehicles, fleet operators are generally expected to switch to ZEVs. Given the highly competitive nature of the road transport market, and the low margins of most operators, once the first movers start benefiting from the resulting lower TCO of ZEVs, their competitors will rapidly follow to avoid the risk of losing important market shares. By requiring Member States to ensure a certain share of ZEVs in new corporate registrations by large companies, the initiative will therefore encourage them to introduce changes in the design of financial and fiscal incentives; the effectiveness of such measures has been demonstrated by recent examples of Belgium and Germany, and PO1A, PO1B and PO1C are expected to lead to other Member Stats taking comparable steps.

In PO2A, PO2B and PO2C the impacts on adjustment costs and costs savings for businesses owning cars and vans are the same as in PO1A, PO1B and PO1C, respectively. They however differ significantly for lorries, with adjustment costs estimated at EUR 36.6 billion in PO2A, EUR 47.9 billion in PO2B and EUR 61.7 billion in PO2C and adjustment costs savings of EUR 30.7 billion in PO2A, EUR 40.9 billion in PO2B and EUR 53.5 billion in PO2C (see Table 15), expressed as present value relative to the baseline. Under these options, road freight transport operators are effectively required to ensure that a certain share of their lorries are ZEVs, in order to be able to continue providing transport services to large companies subject to the obligations. Because the target is set based on transport activity – as opposed to new registrations – it effectively translates in a requirement for a share in the vehicle stock, leading both to a comparatively higher share of ZEV in overall new registrations as well as in a push for earlier fleet renewal. While this is expected to lead to higher fuel costs savings (EUR 13.3 billion in PO2A, EUR 18.2 billion in PO2B and EUR 24 billion in PO2C), the initial capital costs are also more significant than in PO1 (EUR 22.5 billion in PO2A, EUR 31.2 billion in PO2B and EUR 41.8 billion in PO2C).

Especially for SMEs – which constitute more than 99% of road transport operators – access to finance required for such initial investment can represent a significant barrier, as banks price high risk premiums for debt finance of zero-emission lorries in view of the nascent status of the market and the lack of wide recharging infrastructure. In some cases, inability to secure financing for the switch to ZEV or the higher costs of financing compared to larger competitors may result in a SME losing important clients in favour of larger operators, leading to a consolidation of the road freight transport market. This impact could be softened by measures taken by large shippers to support SME sub-contractors 147 , or by complementary tax relief measures in Member States.  

In some cases, in order for a shipper to meet its target, road transport operators will be required to use ZEVs even in use cases where their TCO is still higher than that of diesel lorries. If the resulting additional costs are reflected in the transport service contract and either taken on by the shipper or passed on to the final customer in the form of an increase in the price of the transported goods, this will not significantly impact the transport operator. If the shipper is not ready to pay a higher price, however, the costs will be passed on to the road transport operator, effectively increasing their operation costs and reducing their profit margin.

Changes in fuel tax expenditures for businesses are projected in all policy options (see Table 15). As explained above, the higher uptake of new ZEV by large companies and second-hand ZEV, mostly by SMEs, are expected to result in fuel costs savings and a reduction in the fuel tax expenditures (EUR 17.8 to 34.6 billion in PO1 and EUR 26.5 to 47.8 billion in PO2). At the same time, the increase in the new conventional vehicles by SMEs in the short to medium term in PO1A, PO1B and PO1C and for cars and vans in PO2A, PO2B and PO2C is projected to result in some higher fuel costs and an increase in the fuel tax expenditures (EUR 9.7 to 14.3 billion in PO1 and EUR 5.4 to 6.8 billion in PO2) 148 . 

Net benefits/costs for businesses. PO1A, PO1B and PO1C are expected to result in net benefits for businesses in the scope. The highest benefits are estimated for PO1C (EUR 38.7 billion), followed by PO1B (EUR 26.3 billion) and PO1A (EUR 16.4 billion), expressed as present value over 2029-2050. On the other hand, PO2A, PO2B and PO2C are expected to result in net costs (EUR 26.1 billion in PO2A, EUR 18.4 billion in PO2B and EUR 8.6 billion in PO2C), mainly due to the administrative costs.

Other impacts on vehicle manufacturers. Vehicle manufacturers are not directly impacted by PO1. While they are not directly targeted under PO2 either, they are among the large companies included in its scope, as vehicle manufacturers also command significant volumes of shipped goods. As such they are subject to the targets and impacted in a similar way to other large companies. At the same time, all options will provide indirect benefits to vehicle manufacturers. In order to comply with the emission reduction targets set in the CO2 emission performance standards for light- and heavy-duty vehicles, manufacturers need to ensure that a certain share of the new vehicles they register every year is zero-emission. By ensuring a minimum level of demand for such vehicles from the corporate sector, all options will reduce individual manufacturers’ risk of not meeting their targets, while at the same time creating greater certainty and better conditions for investment in ZEV manufacturing capacity. This is particularly relevant for manufacturers of lorries, which have to meet ambitious CO2 standards for heavy-duty vehicles in 2030, but where the market is less mature compared to cars and also vans. While vehicle manufacturers will benefit from improved demand for corporate ZEVs and greater certainty allowing better planning of investments in ZEV manufacturing capacity, EU vehicle manufacturers might miss part of these benefits as a result of competition from third country manufacturers. This risk is less pronounced on the market for lorries, where EU manufacturer have clearer advantages and higher market shares, while on the cars and vans market competition with third countries is stronger. In the car market, EU manufacturers have a comparatively stronger presence in the corporate than in the private market. Individual manufacturers will benefit differently depending on their respective market position and role in various segments of the automotive market, and how exposed they are to direct competition from third countries, but also how broad the presence of those competitors in different markets and how strong the brand loyalty of fleet managers. These differences are reflected in manufacturers’ answers to the CfE and to the targeted stakeholder consultation.

Other impacts on businesses that are not directly targeted by the proposal. Other businesses that are not directly targeted by the proposal – either because they are not active in transport or because they are not within the scope of the policy options – will still be indirectly impacted by changes in the prices of goods transported by road resulting from the different options.

The policy options that do not set a mandatory target for individual companies (PO1A, PO1B, PO1C) are not expected to bring further impacts on services and goods, as individual companies will retain the ability to choose whether and how to switch to ZEV in accordance with their use case and business plan. Meeting the targets under these options will largely be done by companies with use cases where the TCO of ZEVs is competitive with that of conventional vehicles.

On the other hand, PO2A, PO2B and PO2C will require all large companies to ensure a minimum share of ZEV in the freight transport services performed on their behalf. This means that, in some cases, shippers will have to use or require their hauliers to use ZEVs even in use cases where their TCO is still higher than that of diesel lorries, leading to an overall increase in their logistics costs. The way these additional costs are distributed between the shippers, hauliers, and final customers will depend on the choices of individual shippers, as described above. This type of impact and its distribution among different actors cannot be adequately captured in modelling, but a recent market assessment estimated that shippers requiring hauliers to use ZEVs could face up to a 30% increase in their freight costs in the short term, which in turn would translate in a price increase of the transported products of up to 3%, unless large shippers at least partially absorbed the higher transport costs in their profit margin 149 . Given that all large shippers would be faced with the same increase in costs, however, their incentive to absorb the costs in their profit margin would be limited.

6.1.2.Impacts on citizens 

None of the options are expected to have direct impacts on citizens, as they all target corporate vehicles purchased and used by legal entities. However, all options are projected to have indirect impacts on the market for private cars and vans 150 – both new and second-hand – and some of the options (PO2A, PO2B and PO2C) are also expected to have an indirect impact on the availability and price of services and goods that citizens rely on.