Electric company car on the verge of extinction? What speaks for and what against

The removal of bonuses for the purchase of electric cars has sparked much debate. Some even blame this traffic light decision for the current decline in electric car sales. An important aspect is forgotten: many other privileges and economic benefits of electric mobility remain, especially when used as a company vehicle. The monetary advantage of private use up to a list price of 70,000 euros is only taxable at 0.25 percent instead of one percent of the gross list price.

Electric cars continue to be massively promoted

The traffic light even significantly raised the limit retroactively to January 1, 2024, which was previously 60,000 euros. The traffic light, which was criticized by the electric lobby for eliminating purchase premiums, has actually been a gift to wealthy electric car buyers and suppliers of expensive premium electric vehicles, at the expense of taxpayers.

However, electric mobility in the fleet and company vehicle sector has a problem. The crucial “total cost of ownership” (TCO), i.e. the total cost of a vehicle, is no longer significantly lower for electric cars and is sometimes even higher than for combustion engines. . “There is almost parity in many models. When it comes to regular fleet vehicles, diesels even have a slight advantage,” writes the newspaper Automobilwoche and cites a specially prepared assessment by the Federal Association for Business Mobility (BBM). In January and February, electric cars had only a twelve percent market share in the fleet market. For all of 2023, the average was 19 percent.

Diesel is well positioned compared to electric in terms of costs

The diesel engine, which has already been scrapped, performs especially well. The association compared the TCO of 13 different diesel and electric models. The conclusion: “Over three years, diesel costs an average of 1,324 euros per month, while electric cars cost 1,331 euros. This trend is also confirmed by ADAC cost calculations for combustion engine and electric vehicles,” Automobilwoche reports.

Especially in the case of small electric cars, the environmental bonus played an important role in competitiveness. The larger the cars and the greater the consumption, the more significant the electricity costs are. For several reasons, they are higher in Germany than in many neighboring countries. While costs remain manageable when charging with a Wallbox in your own or company garage, things look bad when it comes to fast charging.

Fast charging costs wipe out price advantages

While the problem with plug-in hybrids as company vehicles is that they often do not charge on long journeys, in pure electric cars it is the costs of fast charging that can ruin the expected savings. According to EFAHRER, Germany's largest electric car portal, a kilowatt hour on a public fast charger costs on average 60 cents. “If a company car driver is not careful when charging his electric car and always refuels at expensive roadside fast chargers, any total cost of ownership advantage of electric cars will be quickly lost,” said Marc Oliver Prinzing, president of the Federal Association of Corporate Mobility, to “Automobilwoche”. In addition, there is a loss of time compared to diesel, gasoline or hybrid cars due to frequent charging processes.

Range remains the main problem

However, it is still a range in which no electric car currently stands a chance against an economical diesel vehicle, especially in the price-sensitive fleet and company car sector. For its latest report on the automobile market, Deutsche Automobil Treuhand (DAT) conducted a survey among fleet managers. Result: Two-thirds of those surveyed do not believe that electric cars can cover all distances in their respective companies using electricity exclusively. Range fraud in electric cars also has more and more repercussions in this sense: in practice, the ranges promised by manufacturers are sometimes clearly below the actual ranges.

The consumption of electric vehicles is especially impressive in urban traffic, with many stop-start phases, and when driving slowly. The combustion engine has a clear disadvantage here, unless it is a hybrid model like the Toyota Prius. On the road, however, heavy electric vehicles require much more energy. And even with a speed limit, this would in principle remain the case, as a current comparison by the magazine “AutoBild” shows: Even at 130 km/h, 53 out of 61 models did not pass the range test of the experts. Of course, this is also increasingly experienced by fleet operators and company vehicle users.

Disappointment in residual value with current electric models

There is also another problem: the high loss of value of current electric models. Especially in the leasing sector, a high proportion of delivered vehicles go to commercial users. The decision of several car rental companies to remove electric cars from their range, especially those from Tesla, has been in the news recently. One of the reasons: the evolution of the residual value is difficult to calculate and is only acceptable to owners if the risk of loss of value falls on the car manufacturer through so-called buyback clauses.

Why electric company cars still have a future

Many companies are likely to buy combustion engines again as company vehicles, whether they are gasoline, hybrid or diesel engines. The superiority of these types of propulsion will continue to be evident on long journeys for the foreseeable future. “There are certainly some companies in this segment that have abandoned electric mobility again,” fleet expert Marc Oliver Prinzing told “Automobilwoche”.

However, there are signs that this will represent more of a dent in the electric fleet market than a substantial decline. Because there are decisive factors that speak clearly in favor of electric company cars – at least when they are not real long-haul cars:

• Many companies use electric cars to present themselves as climate-friendly. Deutsche Telekom, for example, told “Automobilwoche”: “We regret that the financing has expired. But the same applies to us: regardless of general conditions, we maintain our climate goals and continue to drive the electrification of our business fleet.” Furthermore, these companies have often invested considerable sums in their own charging infrastructure and do not simply want to cancel these investments.
• Despite the difficult-to-calculate risks, especially in the event of accident damage, electric cars are generally easier to maintain than combustion engines. The cost advantage increases the longer a vehicle is in stock.
• If the current policy in Germany and the EU continues, this will mean a further increase in gasoline and diesel prices in the future due to increased CO2 taxes. Operating non-electric fleets tends to become increasingly expensive.
• Since most car manufacturers will offer few or no combustion engines within a few years, the market alone will ensure that electric cars become the rule and combustion engines the exception.
• More and more cities are implementing anti-car policies. The ultimate goal of this policy is to completely ban private transportation in city centers; But (older) diesel engines will probably be affected first, then all remaining combustion engines, and finally locally emission-free electric cars. And when it comes to urban tolls, which cities like Berlin, Hamburg and Munich are thinking out loud about due to their tight budgets, electric cars also have a better chance of being exempt from tolls.

Fleet operators can expect a tough price war

Additionally, electric car buyers can expect greater discounts due to the current slow sales. Currently, not even Tesla gets rid of all the vehicles it produces, so Americans will soon put their electric cars back on the market with deep discounts. VW, Mercedes, BMW and company will also have to react to this; under additional pressure from increasing competition from Chinese electric car brands.

Will the combustion engine company car become a lucrative niche in the market?

However, there are also opportunities here for manufacturers open to technology, such as BMW, or the “kings” of classic company cars, such as Skoda. The Czechs have just given their classic Octavia a boost and brought it into line with the EU's strictest emissions standards with new hybrid models. With slight changes, the car is likely to be in production for a long time and will have less and less competition:

• opel wants to get rid of all combustion engine buyers by 2028 at the latest and will only sell electric cars from this year. The Astra as a competitor to the Octavia will no longer be available, as will the upcoming Opel Insignia, which will only be available as an electric vehicle.
• The same applies to all other Stellantis Group models, such as peugeot either Alfa Romeo (purely electric from 2027) or Fiat (from 2030).
• By 2030 at the latest it will also say goodbye ford of combustion engines in the EU. The Ford Focus, still very popular as a company car, will be gone by then; Anyway, the Mondeo no longer exists.
• Audi will be completely phased out as a combustion engine option by 2033 at the latest, Mini 2030. VW At least it will not develop any new non-electric models after 2026.

The combustion engine pie in the fleet business is getting smaller in the medium and long term, but companies like Skoda or BMW, which have a wide range of propulsion technologies, will probably be able to keep a larger slice. Fleet operators planning long-term with petrol, diesel or hybrid cars should avoid brands that are phasing out combustion engines at an early stage in the future. . It is to be expected that, in parallel with the model range, maintenance and service options, as well as the purchase of used combustion engines, will also be reduced.