Alphabet C-level insights: From carrot to stick – adapting to Europe's new electrification rules

The era of incentives and financial encouragement for electrification appears to be winding down in many European countries. For years, subsidies, tax breaks, and grants have been the “carrot” dangled before businesses and consumers to accelerate the transition to electric vehicles (EVs). Now, as we move closer to pivotal deadlines like the European Union’s 2035 ban on internal combustion engine (ICE) vehicles, the narrative is shifting. Increasingly, regulators are trading the carrot for the threat of the stick, relying on time-bound regulatory mandates to drive the next phase of the energy transition.

'Continental' shift: from incentives to enforcement
The shift from rewards to regulatory mandates marks a strategic transformation. Governments across Europe are minimising or eliminating financial incentives, such as subsidies for EV purchases and charging infrastructure. This is especially true in leading markets like the Netherlands: “The carrot that was there for multiple years which drove the popularity of BEV in NL, makes room for the stick as EU targets on new cars being fully electric by 2035 approaches quickly”, comments Mike Wetherell, CEO of Alphabet Netherlands. Instead of sweetening the deal for companies and consumers, regulators are soon going to be doubling down on compliance measures such as emissions reporting requirements under the Corporate Sustainability Reporting Directive (CSRD). Urgency is also becoming a key factor, with the 2035 ICE phase-out looming. By using the stick of regulation rather than the carrot of incentives, authorities hope to accelerate the pace of adoption and ensure that climate targets are met. 

Looking ahead: anticipating changes through 2030 and beyond
According to Nikolaus Engleitner, CCO of Alphabet Austria: “The stick is already coming to play in Austria. As there are already more and more legal obligations that need to be fulfilled by companies and there is no more way around sustainability – e.g., SRD obligations, mandatory energy efficiency audits, etc.”

Similar developments can be observed in the UK as reported by CEO, Mike Dennett: “From 2025, most companies will be required to start gathering data to disclose their Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas emissions in line with their strategy and risk management process. This will throw a spanner in the works for many small and medium-size enterprises (SMEs) based on their reporting capacity, but it may take several years for its full impact to be felt.”

The period between now and 2030 is expected to resemble today’s market dynamics, with EV adoption neither soaring nor plummeting significantly while staying in a holding pattern. Company fleets will remain the primary driver of demand, as businesses increasingly prioritise sustainability and compliance over voluntary employee interest. This transitional phase underscores the importance of businesses stepping up to fill the gap left by retreating subsidies, normalising EVs through corporate fleets and leading by example. As explained by Wetherell, this phase is bound to change eventually, though: Due to governments and regulators significantly ramping up the pressure to achieve their sustainability goals until 2035, the year 2030 is going to mark a major turning point in BEV sales. According to him, the share of BEV will grow significantly after 2030. 

By 2030, the regulatory stick will likely become the dominant driver of EV adoption. Measures such as stricter emissions limits, corporate reporting requirements, and the imminent ICE ban will leave businesses and consumers with little choice but to transition. Jesper Lyndberg, CEO of Alphabet International, shares a similar outlook: “Looking ahead, we expect fleet electrification to accelerate as EV technology becomes more accessible and European regulatory requirements intensify.” A secondary factor furthering this development in the coming years is the birth of an actual second market for EVs: “Additionally, we foresee growing interest in ‘second life’ options for EVs, like re-leasing, which help manage costs and enhance the sustainability of each vehicle”, he adds. 

Navigating the regulatory shift: company fleets in the 'era of the stick'
As governments shift their focus from incentives to enforcement, company fleets are poised to play an even more critical role in the adoption of EVs. Businesses that transition early not only align with upcoming regulations but also position themselves as leaders in sustainability, a key factor in meeting ESG criteria and maintaining their competitive edge.

Leasing and mobility providers like Alphabet are well-positioned to support businesses during this transition. With tailored solutions like flexible leasing options, such as vehicle subscriptions and mid-term rentals, and access to comprehensive charging ecosystems, these companies help businesses comply with regulations while ensuring a smooth and cost-effective shift to sustainable mobility.