The European Commission aims to accelerate demand for electric vehicles (EVs) in corporate fleets with an emphasis on ending tax breaks for petrol or diesel-powered company cars, according to a draft paper to be published on Wednesday.

The EU executive will announce its auto industry action plan after a month of discussions with sector executives to ensure EU car producers can electrify their fleets and compete with more advanced U.S. and Chinese rivals.

EU automakers argue they are bringing out new models, but consumer uptake is weak. The market share of EVs in Europe dropped by a percentage point to 13.6 per cent in 2024, according to automaker association ACEA, but did pick up to 15 per cent in January.

The draft communication, seen by Reuters, says that corporate fleets make up about 60 per cent of new car registrations in the European Union.

“To ensure an adequate uptake of zero emission vehicles in corporate fleets, eliminating distorting subsidies for fossil fuelled vehicles is instrumental,” it says.

The draft paper states that the Commission will propose by the end of the year legislation to decarbonise corporate fleets, with measures to support demand for electric vehicles.

The Commission will also publish on Wednesday recommendations to national, regional and municipal authorities on action they can take to accelerate uptake of EVs.

ACEA has said limited charging infrastructure is partly to blame for weak demand, with nearly 60 per cent of charging stations in just three countries. Germany’s abrupt ending of subsidies and a shortage of affordable EVs until now has also subdued demand.