Transport & Environment (T&E) warned that weak corporate car taxation across the European Union is failing to provide companies with sufficient incentives to switch from fossil-fuel vehicles to electric cars, potentially increasing the bloc’s long-term oil dependency.

According to a new T&E analysis , two-thirds of EU member states do not offer a clear tax signal strong enough to offset the higher upfront cost of electric vehicles (EVs) for company fleets. In 18 out of 27 member states, the tax gap between EVs and fossil-fuel cars is insufficient to compensate for the EV price premium, estimated at €10,650 in 2025.

The organisation assessed whether tax advantages for electric company cars exceed this price gap, arguing that only in those cases can lower operating costs make electrification financially attractive. The study finds that this threshold is met in only nine countries.

Company cars represent a significant share of new vehicle registrations in Europe, accounting for 59% of the market, and are responsible for 78% of oil imports consumed by new cars, according to T&E. The NGO argues that this makes corporate fleets a key lever for reducing transport emissions and oil dependency.

The analysis also highlights major disparities across member states. While some countries provide strong incentives for electrification, others still subsidise fossil-fuel vehicles. T&E reports that 13 member states continue to offer financial advantages for petrol company cars. In Germany, companies receive a net subsidy equivalent to €10,000, while in France petrol cars are taxed at up to €25,000 and in Denmark at €37,000.

These differences, according to the organisation, translate into very different fiscal signals per litre of petrol consumed by company cars. Germany’s system is described as effectively subsidising fuel use, while France and Denmark generate significantly higher tax revenues per litre equivalent.

T&E also notes that recent reforms in some countries have led to rapid electrification of company fleets. In Belgium, corporate EV registrations increased from 8.8% in 2021 to 54.2% in 2025 following tax changes introduced in 2021. In France, reforms implemented in 2024 and 2025 contributed to corporate car registrations reaching a record 41.3% in March 2026.

However, in major automotive markets such as Germany, Spain, Italy and Poland, T&E says similar reforms have not yet been implemented to ensure that the tax gap is sufficient to favour electric vehicles.

The organisation links company car taxation directly to EU energy security, noting that weak incentives risk locking the bloc into higher oil consumption and prolonged dependence on fossil fuel imports. It argues that corporate fleet policy is central to upcoming EU efforts, including the proposed Clean Corporate Vehicle regulation, which aims for 45% of new corporate cars to be electric by 2030.

Under the proposal, responsibility for meeting electrification targets would fall on member states, which T&E supports, arguing that national tax systems are the most effective tool to drive change.

The report also criticises the persistence of subsidies for fossil-fuel company cars in nearly half of EU countries, and calls for reforms to end support for petrol vehicles while directing incentives only towards electric vehicles, potentially including conditions linked to European production.

T&E fleet and freight director Stef Cornelis said that several large member states are currently undermining EU efforts to reduce oil dependency. “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,” he said. “The EU fleets regulation is the catalyst needed to break this inertia.”

The organisation concludes that without stronger tax differentiation between electric and fossil-fuel company cars, Europe risks prolonging its reliance on oil imports and slowing the transition to zero-emission transport.