Top EU countries spend US$45bil subsidising fossil-fuel company cars, says study

LONDON: The EU's five biggest members spend 42 billion euros (US$45.6bil/RM196bil) annually subsidising fossil-fuel company cars, according to a study commissioned by environmental group Transport & Environment (T&E), which called for more subsidies for EVs instead.

Company cars make up around 60% of new car sales in Europe.

Italy provides 16 billion euros in subsidies for fossil-fuel company cars, followed by Germany, which provides 13.7 billion euros, the study by consultancy Environmental Resources Management (ERM), released on Monday, showed.

France and Poland provided 6.4 billion euros and 6.1 billion euros annually respectively.

Companies offer cars as perks for employees, often with significant benefit-in-kind subsidies including offsetting consumer taxes and fuel usage benefits.

Around 15 billion euros across the four countries goes to subsidizing SUVs, the study found. Company car drivers receive an average annual tax benefit of 6,800 euros, ranging up to 21,600 euros for high-polluting larger models.

"This is completely illogical and completely unacceptable, that we're still pouring billions of taxpayer money into a technology that's completely contradictory to the European Commission's green transition agenda," T&E's director of fleets Stef Cornelis told Reuters.

The study comes as Europe's EV sales have fallen, in part because they are more expensive than fossil-fuel equivalent models and thus out of reach for many consumers.

Sales of fully electric cars slumped 43.9% in the European Union in August, as its biggest EV markets Germany and France recorded drops of 68.8% and 33.1% respectively, according to industry data.

The ERM study found that financial incentives for drivers of company cars to switch to EVs are only provided in former EU member the United Kingdom.

European Commission president Ursula von der Leyen told the European Union's new climate chief Wopke Hoekstra in a letter dated Sept 17 that one of Hoekstra's priorities will be to propose how to phase out fossil-fuel subsidies.