Some two thirds of European countries are failing to offer tax incentives to companies to encourage them to transition away from fossil fuel-powered cars, new analysis from Transport & Environment (T&E) has revealed.
According to T&E, in 18 out of 27 EU member states, the tax incentives to switch to EVs are not sufficient to offset the higher upfront purchase costs of said vehicles, compared with petrol or diesel-powered vehicles.
As it noted, such a situation risks ‘intensifying the EU’s oil dependency’, and ‘locking the continent into a decades-long reliance on petrostates’.
Company cars
Company cars account for 59% of new car registrations in the bloc, as well as close to four fifths (78%) of the oil consumed by newly-registered cars.
To assess the effectiveness of European taxation measures, T&E compared the tax gap between electric vehicles and fossil-fuel company cars against the average EV price premium, which was estimated at €10,650 as of last year.
As it found, just nine countries currently provide strong enough incentives to make EVs financially competitive for businesses. Belgium, which reformatted its company car tax system in 2021, and France, which introduced similar reforms in 2024 and 2025, were highlighted as examples of companies where policy-driven change has proven successful.
Lack of incentives
“At a time when the EU wants to cut oil dependency, governments of the EU’s largest car markets are failing to incentivise companies to go electric,” commented Stef Cornelis, fleets and freight director at T&E.
“The EU fleets regulation is the catalyst needed to break this inertia. The EU Council and EU Parliament should inject more ambition into the Commission’s proposal to ensure Europe can reduce oil imports rapidly.”
The proposed EU Clean Corporate Vehicles regulation, which was unveiled by the European Commission in late 2025, also offers a potential solution, T&E noted – the measure proposes setting national electrification targets for large corporate fleets, with an EU-wide average target of 45% electric company car registrations by 2030.
“It’s perplexing that in almost half of EU countries, governments are still giving a subsidy for companies to drive a petrol car,” Cornelis added. “Lawmakers and member states must defend the provision that financial benefits can only be given to a company car when it is electric and produced in Europe. This way we create jobs locally, reduce oil imports and safeguard the future of Europe’s auto industry.” Read more here.
