Stricter European standards are expected to reshape demand for plug-in hybrid vehicles (PHEV), forcing fleet buyers and company automotive users to reassess their cost-effectiveness.
Under the brand new Euro 6e-bis emissions rules, PHEVs will undergo stricter emissions testing in 2025 to offer more accurate real-world data, potentially reducing their appeal as company cars because of increased taxation.
Currently, PHEVs emitting lower than 50g/km of CO2 are categorised into bands based on their electric-only range, attracting a benefit-in-kind (BiK) tax rate of 5%, 8%, or 12%. Nevertheless, under the revised testing standards, PHEVs that exceed the 50g/km threshold will face a minimum BiK rate of 15%.
This alteration follows the UK Government’s October budget, which also adjusted BiK bands, making a double challenge for PHEVs.
The updated emissions standard, often called Euro 6e-bis, got here into effect on January 1, 2025, for newly launched PHEVs and can apply to all existing models by December 31, 2025.
Cars have to be re-homologated before the top of 2025, with BiK tax rates based on the revised CO2 emissions figures from their production date.
Existing PHEV drivers is not going to be affected, but those ordering latest models this yr may encounter higher BiK rates if the vehicle’s CO2 emissions increase because of re-homologation between order and delivery.
Revised Testing Methodology
The updated testing evaluates CO2 emissions in two modes:
- Fully charged battery: Measured until depletion.
- Empty battery: Measured when the battery is discharged.
These values are weighted using a utility factor (UF) based on the vehicle’s electric-only range.
Euro 6e regulations had increased the UF to 800km (497 miles). With Euro 6e-bis, this has jumped to 2,220km (1,367 miles). These adjustments, introduced by the European Commission in 2023, aim to higher reflect real-world usage.
Impact on PHEVs
The revised UF could significantly increase official CO2 emissions for some PHEVs. For example, the BMW X1 xDrive25e PHEV, which has an electric-only range of 70km (43 miles), currently reports emissions of 45g/km under the older UF. With Euro 6e-bis, its emissions would rise to 96g/km, doubling its BiK rate from 8% to 24%.
By 2027, further changes will raise the UF to 4,260km (2,647 miles), pushing , the X1’s emissions to 122g/km and potentially increasing its BiK rate even further.
Sepi Arani, global managing director, industrial, at Carwow said that while robust testing of true emissions is a positive change, manufacturers would face a difficult balancing act to avoid heavy fines because of this of CAFE and the UK ZEV mandate.
“Added to this,” he said, “there’s little to no opportunity for brands to make significant changes to PHEV models on sale by the top of 2025, and it drives extra questions into the minds of consumers considering these vehicles as a part of an organization automotive scheme.
“Those PHEVs that now make much less financial sense on company automotive lists will likely shift into the retail market in 2025, and potentially manufacturers will end product lifecycles early or significantly reduce volume and production beyond 2025 – meaning even less selection for consumers.
“From an adoption perspective, further changes that reduce the financial incentives for low or zero emission vehicles can only damage consumer confidence as an entire, and in turn curtail adoption.”
Leasing and fleet management services business Alphabet advises that customer considering ordering a PHEV within the near future should select one which suits their needs after which seek advice from the dealer regarding their specific model of selection, in addition to when the usual can be applied to the vehicle. “You then can order your vehicle with peace of mind,” it said.
This Article First Appeared At www.am-online.com
