Electric company cars are replacing diesel – here’s why

Company cars are changing fast, with many businesses now reviewing their long‑term approach to diesel. Across the UK, organisations are increasingly transitioning from petrol and diesel fleets to electric vehicles (EVs) driven by lower running costs, favourable tax treatment and strong demand from employees.

Recent data from the Climate Group’s EV100 report backs this up. More than 630,000 EVs are now part of company fleets – a 57% increase on last year. Electric vehicles are no longer the future of company cars. They’re very much the present.

What’s driving the move away from petrol and diesel cars?

Well, there’s 2 answers to this question;

1. EVs make financial sense
   Choosing an electric car through a salary sacrifice or company car scheme can significantly reduce costs for both employers and employees. Low Benefit in Kind (BiK) rates, lower fuel costs, reduced maintenance and tax efficiencies all combine to make EVs the most cost‑effective option on the market.
2. The road ahead is electric
   The government’s Road to Zero strategy and the 2030 ban on new petrol and diesel cars are fast approaching. Businesses that act now are future‑proofing their fleet while avoiding the cost and disruption of switching later.

Why are we seeing such a huge drop in diesel company cars?

HMRC figures show just how dramatic the change has been. Diesel cars now account for only 13% of company cars, down from 78% just six years ago. Meanwhile fully electric cars make up 41% of company car drivers, which amounts to more than half a million EV drivers across the UK.

In fact, only 1% of company cars now emit more than 165g/km of CO₂, compared to 58% two decades ago. According to HMRC, rising fuel costs and the growing efficiency of electric vehicles have made petrol and diesel simply less attractive, especially for regular commuters.

‘In the intervening 20 years the population of company cars has become significantly more efficient with much reduced CO₂ emissions for distance travelled.’ – HMRC states.

You can find the full HMRC report, here.

And it isn’t just fleets that are changing.

The wider car market tells the same story

The decline of diesel is happening across the whole UK car market. In the first part of 2025, diesel cars made up just 5.6% of new registrations, while electric vehicles claimed over 21%.

You can find the full report from SMMT, here.

EV registrations rose by more than 40% year‑on‑year, and the demand isn’t limited to brand‑new models. The used EV market is booming, with record‑breaking sales showing that drivers at every level are making the switch.*

Petrol cars are still ahead in total numbers but even that lead is shrinking. EVs are clearly catching up fast.

Watch this 2-minute video to find out all the benefits you get with an electric car, including PHEVs and hybrids. 

How benefit in kind (BiK) is accelerating EV adoption. 

Low BiK rates remain one of the biggest reasons employees choose electric vehicles. For many drivers, the difference between an EV and a petrol or diesel car can mean hundreds of pounds saved each year without compromising on performance, comfort or driving experience.

Learn more about benefit in kind, here.

Our driver research shows that cost savings, sustainability and convenience are the main factors influencing EV uptake. For employers, EVs support ESG goals while helping to attract and retain talent.

What drivers are choosing next

Our latest driver survey reinforces the shift:

• Only 11% of drivers would choose petrol next
• Just 6% would choose diesel
• 31% prefer electric
• 26% plan to choose a hybrid
• And 71% of drivers not currently in the scheme say they plan to switch to an EV within the next four years

What does this mean for employers and drivers?

If you’re considering an electric salary sacrifice scheme for your business, we can help you explore what it could look like in practice. Take a look at our case studies or get in touch to see how going electric could work for your employees.

The move from diesel to electric isn’t slowing down. The only question is, when will your fleet make the switch?

*https://www.zap-map.com/ev-stats/ev-market

Correct as of November 2025