Fleet, finance, and the future: can Europe keep pace?

Summary

In a recent Asset Finance Connect (AFC) webcast sponsored by Bynx, senior figures from Deloitte and Arval UK gathered to discuss one of the most pressing challenges facing the European automotive sector: how to align the EU’s sweeping industrial strategy with the real-world demands of fleet operators, retail finance markets, and an evolving mobility landscape shaped by electrification, automation, and regulatory uncertainty.

Hosted by David Betteley, head of content at AFC, the session featured Benedikt Middendorf, director of automotive mobility at Deloitte, and John Peters, head of consultancy at Arval UK, offering detailed insight into the scale of change underway in the European and UK auto sectors and the realities of delivering on ambitious government roadmaps.

A rapidly changing landscape for fleet electrification

The EU and UK are investing heavily in their respective auto strategies. The EU has outlined an extensive industrial plan to decarbonise transport and secure supply chains, while the UK is pursuing its Auto 2030 Programme and Advanced Manufacturing Plan, supported by over £2 billion in capital and R&D funding. These plans are underpinned by increasingly stringent zero-emission vehicle (ZEV) mandates, most notably requiring that by 2027, at least 50% of new corporate car purchases in the EU be ZEVs, rising to 100% by 2030, with full corporate fleet electrification expected by 2035.

However, both Middendorf and Peters voiced scepticism over whether these targets are realistically achievable under current conditions. Peters suggested that the passenger vehicle market could meet its goals, but electrification of commercial fleets remains far more challenging. While benefit-in-kind tax incentives have encouraged early EV uptake, issues such as charging infrastructure availability and cost barriers persist, particularly for light commercial vehicles.

Middendorf was unequivocal that successful electrification must begin with the customer, not the regulator or the manufacturer. He argued that OEMs had pushed the electrification agenda without a deep understanding of end-user readiness, and warned that targets will remain out of reach unless policies are designed around what customers actually need to adapt to new technologies. Affordability, usability, and convenience, not mandates, will ultimately drive adoption.

“Nobody ever asked the customer what they needed to adopt this technology,” said Benedikt Middendorf, underscoring the disconnect between political ambition and end-user needs. “OEMs decided the future was electric, and now we’re expecting customers and fleets to adapt, often without the right tools or support.”

The role of infrastructure and residual value risk

Both panellists agreed that one of the most significant inhibitors of EV adoption is the lack of sufficient public charging infrastructure. While “range anxiety” is slowly fading, according to Arval’s global barometer of over 8,000 fleet managers, the bigger concern now is the reliability and availability of public charging stations, particularly in dense urban areas. European governments must step up not just in terms of installing more chargers, but also in streamlining planning permissions and incentivising deployment where private capital alone may hesitate to invest.

“We’re seeing a big shift in the way customers think about EVs. They understand the technology better now, but what they really want is to know there’s a charger available, and that it actually works at a reasonable cost,” said Peters.

As for the economics of EVs, there was consensus that residual value (RV) risk – a key concern for lessors and fleet managers – will decline as battery technologies mature and data on long-term performance improves. Peters highlighted that battery degradation is proving far less severe than many feared, and this should help stabilise RVs within acceptable parameters. Peters noted that: “RV will stabilise as the tech matures. And while we can’t expect direct government subsidies, we can ask for planning support, tax relief, and better infrastructure to support the transition.”

Middendorf added that the very concept of RVs may become less relevant as the industry moves toward circular economy models focused on usage rather than ownership, with lifecycle value and recyclability of vehicles taking centre stage. “In a few years, we won’t be talking about RVs for EVs – we’ll be talking about their recycling value, about lifecycle, about the circular economy,” said Middendorf.

Regulatory certainty: the missing link

The webcast’s second major theme centred on regulation, specifically, the credibility and enforceability of emissions and ZEV targets. Both the EU and UK have introduced financial penalties for non-compliance. In the EU, companies that miss their electrification targets may face fines up to 1% of turnover and €2,000 per non-compliant vehicle. The UK’s penalties are similarly severe, particularly for commercial vehicles.

Yet there remains considerable doubt over whether these fines will actually be enforced if targets are missed. Middendorf criticised the tendency of governments to shift goalposts, noting that frequent postponements of emission deadlines send the wrong message to industry.

“It’s nice to set targets, but if we’re not putting the customer at the centre, we’ll keep missing them,” warned Middendorf. “Governments need to stop moving the goalposts. We need belief in the system – a shared direction – not shifting deadlines.”

Peters agreed, warning that policy instability could undermine the long-term investments that automakers and finance providers are being asked to make. “Every time governments change the rules, it undermines credibility,” he said. “The industry is making long-term investment decisions and needs confidence that today’s rules won’t be rewritten tomorrow.”

There was also a broader philosophical divide between encouraging compliance through punitive measures versus supporting transition with direct and indirect incentives. While both panellists were sceptical about ongoing direct subsidies given fiscal constraints, they called for smarter interventions, such as public investment in charging infrastructure, tax breaks, and perhaps even non-financial incentives like expedited planning or regulatory support.

Social leasing schemes, briefly trialled in France and Germany, were discussed as one promising idea that failed to scale. Middendorf saw them as a valuable tool for broadening access to EVs and supporting the used market, particularly for low-income households. But the schemes quickly ran out of funding, a clear example of good ideas undermined by poor implementation planning.

From ownership to usership: a multi-cycle future

As the market matures, both Peters and Middendorf see fleet operators playing a vital role in reshaping the economics of EVs through multi-cycle leasing models. With fewer moving parts and longer usable lives, EVs are well-suited to second and third leasing cycles. This could help lower costs for consumers and expand the availability of used EVs, which is critical to achieving mass-market adoption.

“We’re seeing a cultural shift. People are more willing to consider used EVs. But traditional OEMs and captives don’t yet have the systems to manage multi-cycle leasing at scale,” said Middendorf.

Yet the move to multi-cycle leasing represents a significant operational shift. Traditional OEMs and captive finance arms often lack the infrastructure and systems to manage multi-stage vehicle lifecycles. Fleet operators, by contrast, already have the capabilities, processes, and scale needed to make this model work. But Peters cautioned that it won’t be easy; companies will need more investment, training, adapt legacy systems, and adopt a more agile approach to vehicle financing and lifecycle management. “Fleet managers are used to delivering at the lowest cost possible. Now they’ll need to become more flexible and strategic.”

Battery health checks are emerging as a critical enabler in this transition, helping reassure consumers and used-car dealers alike. As data becomes more widely available and standardised, this will help unlock a stronger secondary market for EVs, reducing the current pressure to rely solely on new car sales.

Autonomous vehicles and Europe’s innovation gap

Looking further ahead, the conversation turned to autonomous vehicles, where Europe is falling behind. According to Middendorf, the EU is 10 to 15 years behind China and the United States in autonomous vehicle readiness, not due to technology, but regulation and market appetite: “The tech is there, but regulation, customer mindset, and investment are not.” He argued that autonomous vehicles will first gain traction in commercial use cases such as logistics and urban delivery before reaching private consumers.

Peters noted that we’re likely to see a “coexistence of models” in the future: traditional ownership, subscription models, and autonomous vehicle fleets all operating side-by-side. Leasing and finance providers will need to evolve, offering a broader suite of services, not just financing, but fleet management, vehicle servicing, and lifecycle support for autonomous vehicles. He suggested that in the long term, the role of a leasing company could look more like a mobility solutions provider, especially in sectors like last-mile delivery.

However, both speakers cautioned against getting too far ahead of today’s challenges. While autonomous vehicles are a critical future trend, the more urgent task is to stabilise and future-proof the auto industry now. As Middendorf noted: “This will be the future, no doubt. But Europe isn’t adapting fast enough. We should be focused on what we need to do in the next 2–5 years to catch up.”

Competition from Chinese automakers, particularly in the affordable EV segment, is growing fast. European OEMs and regulators must move quickly to prevent a loss of market share, not just through protectionist measures like tariffs, but by ensuring the EU remains a competitive environment for innovation and manufacturing.

“The customer just wants a car that works and is affordable. Chinese brands are delivering on that better than many European OEMs right now,” said Middendorf. “We will likely see co-existence, but if we don’t transform quickly, the EU industry could lose the lower-price segment altogether.”

Conclusion: from vision to viability

The AFC webcast made clear that the road to zero-emission fleets, competitive European auto manufacturing, and smart mobility ecosystems is a long one. But it is also filled with opportunity.

Fleet and finance players are at the heart of this transformation. If the customer is placed at the centre of strategy, as both Peters and Middendorf emphasized, the transition to electric, connected, and eventually autonomous mobility can be managed sustainably. This requires not just bold industrial policy, but executional clarity, infrastructure investment, and business model innovation.

As Middendorf concluded, “The first step is to transform the auto industry and make it future-ready, starting now. We need to focus not on the 30-year future, but on the next five years.”

Watch the webcast in full here.