The Green Wheels Craze

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With rising fuel prices and concern for the environment on the up, the global automotive industry is undergoing a truly green tech innovation. While plug-in hybrid cars are becoming increasingly popular among European fleet operators, the hype that drives the Polish fleet sector is not as green as it would seem

By Małgorzata Krakowska

The ambitions of Poland’s new government to ditch diesel-fueled road transport in favor of hybrid and electric cars follows global trends in taking on air pollution. The new policy line that is aimed at transforming the automobile industry into an eco-friendly sector is not without consequences for the tastes and preferences of the commercial customer. And so, car fleet operators are among the first users within the automobile sector who are seeking to boost the numbers of electric or hybrid vehicles as part of their fleet. However, trends that influence the sector’s new business strategy are not driven exclusively by political plans for the reduction of pollution, and go beyond futuristic design frills.

The greener, the faster, the better

Only in 2015, the National Central Vehicle and Driver Register (Centralna Ewidencja Pojazdów i Kierowców; CEPiK) reported that fleet operators registered 98 electric cars – 25 percent more than the year before. The popularity of hybrid cars among car fleet operators is also rising. In 2016, CEPiK registered more than 3,100 hybrids. Compared to last year, the number is higher by 40 percent. Why do car fleet operators choose hybrids over conventional cars?

With motor vehicles producing around 15 percent of the EU’s carbon dioxide emissions, road transportation is the largest single source of air pollution. Car fleet companies aim to restore the confidence of consumers by complying with EU environmental requirements for the automobile sector. Models like the Volvo V60 Plug-in Hybrid or the Lexus GS are “green,” with CO2 emissions that are under 120 g/km. “Nearly all international car fleet companies endorse corporate responsibility through environmental sustainability, and so it is natural on the part of their philosophy to become environmentally friendly,” said Stanisław Dojs, PR Manager at Volvo Cars Polska. The Swedish company, as well as other industry leaders such as Lexus or Toyota, have been adjusting significantly to global trends. For example, Toyota has sold more than 8 million hybrid cars until now, and Volvo plans to sell 1 million electric and plug-in hybrid cars by 2025.

On the other hand, CO2 limits are not the main reason for car fleet managers to focus on green tech. “While internal combustion engines of conventional vehicles are powered only by diesel or gasoline, hybrids have an additional electric motor and a battery that can be powered by electric energy,” Dojs said. Gasoline-electric or hybrid cars are more cost-effective because the engine construction can achieve better fuel efficiency. “Our employees often have to cover a distance of hundreds of kilometers,” as Olgierd Kasparek from Easy Rent A Car informed in a press release. “For car fleet operators, it is essential to cut costs, save money, and provide the greatest comfort possible.”

However, global trends don’t always translate into local ones. Sector experts notice that the eco-trend is more popular among foreign fleet operators who require vehicles to be sustainable and eco-friendly. “That’s because of their internal policies, which are based on western regulations requiring vehicles to have CO2 limits. For the majority of national fleet operators, the eco vibe is not just hype. “Polish car fleet companies do not see CO2 limits as their main priority. Local operators want their vehicles to drive economically, and to be cost-efficient rather than environmentally sustainable,” as Dojs observed.

Car fleet managers choose hybrids because they are excellent for city driving. According to a survey carried out by Alphabet Polska among fleet managers, more than 50 percent of vehicles travel less than 100 km daily. As Łukasz Kotowski, tech journalist writing for popular said, the costs of running a gasoline or diesel engine are 1.5 times higher than for cars equipped with a hybrid engine. “Hybrid engine performance helps you save a lot of money,” he added.

Are government incentives for plug-in hybrids coming soon?

The high price for plug-in hybrids, and the lack of incentives still remain the main disadvantage. For example, the price of a Volvo V60 plug-in is PLN 280,000 (around €65,000) and rates for a Toyota Prius begin at PLN 120,000 (approx. €28,000). “Our national tax policy with regard to cars is swimming against a green tide,” Michał Zwyrtek, senior manager from PwC admitted. “There are no tax-related or financial incentives such as reduced highway tolls for hybrid-powered vehicles,” added Dojs from Volvo Cars Polska.

International car fleet companies operating in Poland can afford expensive hybrids that comply with emission regulations, but Polish car fleet operators are often on a tight budget when it comes to buying modern vehicles. Zwyrtek identified the national tax system as one big paradox. “Taxes on passenger cars that are ecological are not determined by EU directives, but are levied in the form of national excise duty. Commercial customers must pay 3.1 percent extra for cars with an engine capacity below 2,000 cm3, and 18.6 percent of the tax base for vehicles with an engine capacity above 2,000 cm3,” he explained. As a consequence, owners of “green cars” such as the Volvo V60 Plug-in Hybrid or the Lexus GS 450h with an engine capacity above 2,000 cm3 pay higher taxes.

So far, only the Ministry of Environment has launched an environmental program that minimizes the effects of air pollution. The new plan, however, deals exclusively with public transport. As Joanna Józefiak, the deputy advisor to the Minister of Environment said, the main reason why the institution decided to focus exclusively on the incentives for public transport was the biggest efficiency of that sector.

But are hopes for government incentives for plug-ins fading? Perhaps not, the Ministry of Finance said that the initial work to change the current tax system to become more eco-friendly was being done. “The Ministry of Finance is considering potential changes in existing tax rules for passenger cars that would include new factors like CO2 emissions and engine capacity.” According to the Press Office, the complexity of the issue is tremendous and the ministry avoided any definite answer as to when the tax benefits would be announced under the new scheme

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