Belgium is experiencing a significant boom in electric vehicle registrations, with new registrations soaring by 37.3% in 2024, totaling 127,922 units. This growth is fueled by strategic government subsidies aimed at corporate buyers, leading to Belgium becoming the third-largest electric vehicle market in the EU. Tax deductions for electric vehicles have replaced incentives for combustion cars, driving sales among businesses and individuals. However, new tax regulations and concerns about rapid depreciation and competition present challenges for the future.
The Rise of Electric Cars in Belgium
Despite the challenges faced by the electric vehicle market, such as high prices and concerns regarding range and charging infrastructure, Belgium emerges as a standout performer within Europe. In 2024, the country witnessed a remarkable surge in new electric car registrations, reaching an impressive total of 127,922 units. This figure represents a staggering 37.3% increase compared to the previous year, as reported by Traxio, the Belgian federation of automotive professionals. Moreover, the used electric vehicle market also experienced significant growth, jumping from 12,597 units in 2023 to 23,515 in 2024, marking a remarkable 104.7% increase. Overall, the combined sales of new and used electric vehicles reached 151,437 units in 2024, reflecting a remarkable annual growth rate of 45.2%. Electric cars now make up 28.5% of the total car sales in Belgium, a stark contrast to the declining trends observed across Europe. But what’s driving this exceptional growth?
Subsidies Fueling Growth
The key to Belgium’s electric car sales boom doesn’t stem from drastic price reductions or a government ban on combustion engine vehicles; rather, it lies in the strategic implementation of subsidies. The government has effectively targeted potential buyers, particularly in the corporate sector, which dominates the Belgian automotive landscape. Company vehicles account for nearly two-thirds of all new registrations annually. A recent reform shifted the focus from traditional combustion vehicles to electric options, rapidly elevating Belgium to the position of the third-largest electric vehicle market in the European Union.
This emphasis on corporate sales has emerged as a potential model for other European nations looking to accelerate their electric vehicle transitions. The European Commission has acknowledged this approach as part of a broader initiative to support the automotive industry across the continent. Inspired by France’s social leasing initiative aimed at lower-income households, Europe is keen on expanding such subsidy models.
Unlike direct subsidies that can strain public finances, Belgium’s approach utilizes tax deductions. Since 2023, businesses have been allowed to deduct the full value of electric vehicles from their taxable income, thereby alleviating their tax burden while providing benefits to employees. This method avoids the conventional model of direct financial transfers to manufacturers, although it does lead to a loss of revenue for the Belgian government due to uncollected taxes.
This tax incentive has proven advantageous for corporate fleets. Stef Cornelis, director of electric fleets at Transport & Environment, lauds it as one of Belgium’s most effective climate policies. The rationale is simple: offering a company car is often more beneficial for employers than increasing salaries, which are heavily taxed. With vehicle renewals occurring every three to four years, this strategy is both quick and effective.
While until mid-2023, combustion vehicles enjoyed tax incentives, only electric vehicles can now benefit from full deductions, leading to a significant uptick in sales. Although corporate purchases of electric vehicles remain dominant, individual sales have seen notable growth in 2024, particularly in Flanders, where incentives were still in place until last November. Individual purchases surged by 151.4%, increasing from 5,634 to 14,166 units. In contrast, Wallonia recorded only 2,602 individual registrations, hindered by the absence of subsidies.
This policy, once criticized for potentially facilitating high CO2 emissions, is now seen as a driving force in Belgium’s ecological transition within one of its most polluting sectors. France is keen to adapt this successful model, albeit with a different approach that tightens the benefits calculation for company vehicles.
As of February 1, 2025, new tax regulations will be implemented retroactively for vehicles acquired or leased after this date. These changes aim to increase the taxable base for employees using company cars for personal purposes, while maintaining a 70% tax deduction for fully electric vehicles that adhere to current “eco-score” standards. This policy aims to favor European-made models, potentially disadvantaging foreign brands.
However, the new regulations regarding electric vehicle charging have stirred controversy among industry stakeholders. Mobilians has criticized the lack of consultation on these significant changes affecting companies and their employees. The organization argues that this reform complicates tax regulations, contradicting the government’s goal of simplifying administrative processes. Concerns about stability have also been voiced by the Union of Long-Term Car Rental Companies (Sesamlld), advocating for a delay in the implementation of these new requirements to allow adequate adjustment time for fleet managers and employees.
While the Belgian model offers valuable insights, it may not be a universal solution. It forms part of a comprehensive strategy aimed at boosting electric vehicle sales in the long term. Nonetheless, the European automotive industry still faces challenges, particularly from rising competition among Asian manufacturers and uncertainties related to American tariffs. In response, Europe has increased customs duties on electric cars imported from China, which has hindered growth in electric vehicle sales rather than encouraging the purchase of European-made models.
Additionally, the rapid depreciation of electric vehicles raises concerns among financial institutions that provide leasing options now favored by consumers. We have prepared a detailed analysis on why the swift depreciation of electric cars is alarming for financiers, dealers, and manufacturers, prompting a reevaluation of residual values and financing terms. Another avenue to democratize electric vehicles lies in the introduction of more affordable electric models. Recent offerings include the Citroën ë-C3, Renault 5 E-Tech, Fiat Grande Panda, and the new-generation Dacia Spring, with anticipation growing for upcoming models priced under €20,000, such as the Renault Twingo and the Volkswagen ID.1 EVERY1.