The automotive industry is undergoing significant regulatory changes aimed at achieving more accurate real-world emissions data. As of January 1, 2025, the Euro 6e-bis emissions standard has been implemented for all newly launched plug-in hybrid vehicles (PHEVs), with a mandate for all existing models to comply by December 31, 2025. This development is poised to impact company car drivers, particularly concerning Benefit-in-Kind (BiK) taxation.
The Euro 6e-bis standard introduces a more rigorous testing methodology to determine official CO2 emission values for PHEVs. The testing process evaluates emissions in two distinct modes:
- Fully Charged Battery Mode: CO2 emissions are measured while the vehicle operates on a fully charged battery until depletion.
- Empty Battery Mode: CO2 emissions are assessed when the battery is discharged, and the vehicle relies solely on its internal combustion engine.
The results from these tests are then weighted using a Utility Factor (UF), which correlates with the vehicle’s electric-only driving range. Previously, under Euro 6e regulations, the UF was set at 800 km (497 miles). However, Euro 6e-bis has increased the UF to 2,220 km (1,367 miles), aiming to better reflect real-world usage patterns.
The adjustment in the UF is expected to result in higher official CO2 emission values for many PHEVs. For instance, the BMW X1 xDrive25e PHEV, which boasts an electric-only range of approximately 70 km (43 miles), currently reports emissions of 45g/km under the previous UF. With the implementation of Euro 6e-bis, its emissions are projected to rise to 96g/km. This significant increase would elevate its BiK tax rate from 8% to 24%, substantially affecting the financial attractiveness of such vehicles for company car drivers.
Looking ahead, further changes are anticipated by 2027, with the UF expected to rise to 4,260 km (2,647 miles). This progression could lead to even higher official CO2 emissions for PHEVs, thereby increasing their associated BiK tax rates. Consequently, fleet buyers and company car users may need to reassess the cost-effectiveness of PHEVs in light of these regulatory changes.
In response to these developments, it is imperative for fleet managers and company car drivers to:
- Stay Informed: Regularly monitor updates on emissions regulations and BiK taxation policies to make well-informed decisions.
- Evaluate Vehicle Options: Consider the potential financial implications of higher CO2 emissions on BiK rates when selecting PHEVs.
- Explore Alternatives: Assess the viability of fully electric vehicles (EVs) or other low-emission alternatives that may offer more favourable tax positions under the evolving regulatory framework.
The introduction of the Euro 6e-bis emissions standard marks a pivotal shift in the assessment of PHEV emissions, with significant implications for company car taxation. As the regulatory landscape continues to evolve, staying informed and adaptable will be crucial for stakeholders in the automotive and fleet management sectors.
Author: Mark Salisbury, Editor
