The environmental NGO Transport & Environment (T&E) says that the gap between plug-in hybrids’ official CO₂ figures and their real-world emissions is widening, undermining claims about their climate benefits and leaving consumers duped.

On the other hand, T&E notes that a rapid transition to electric company cars could create 344,000 EU jobs by 2030.

PHEV emissions seriously underestimated

T&E urges governments to uphold the next correction to PHEV CO2 accounting rules to drive PHEV improvements and prevent consumer cheating. Powering a PHEV costs drivers up to €680 more a year than carmakers claim, says the NGO.

The gap between plug-in hybrids’ official CO₂ figures and their real-world emissions is widening, T&E says. PHEV models registered in 2024 emitted around six times their official CO₂ figures on the road, up from five times in 2023, according to a new T&E report. This gap adds €680 in extra annual fuel expenses for the average driver of a PHEV sold in 2024.

Analysis of European Environment Agency data finds PHEV real-world emissions just 14% lower than conventional combustion and hybrid cars, despite official test figures suggesting an 83% reduction. Even when the battery powers the vehicle, the combustion engine runs for roughly a third of the kilometers driven.

The EU is addressing the real-world emissions discrepancy by correcting the ‘utility factor’, which sets the share of driving powered by electricity when calculating official PHEV emissions. T&E finds that the first correction in 2025/6 has already encouraged manufacturers to fit larger batteries and extend electric range.

The analysis also finds that further technology and design progress could keep emissions below 50 grams of CO₂ per kilometer (gCO₂/km) once the EU PHEV emission rules have been further corrected. With the next correction to the PHEV accounting rules due to start in November 2026, T&E urges governments to keep it in place to account for PHEVs’ real emissions.

The warning comes as Germany pushes to freeze the upcoming PHEV utility factor correction as part of France-German negotiations on a broader automotive package deal.

Lucien Mathieu, cars director at T&E, says: “Rolling back the next correction means deliberately manipulating European car emissions math. If Germany gets its way, carmakers will keep overstating how much PHEVs drive on electric power, leaving consumers with higher fuel bills and prolonging the EU’s oil dependency.”

The utility-factor correction does more than fix misleading emissions figures. It is pushing carmakers to improve the range of PHEVs.”

Improvements are possible, but politicians must want them

T&E analyzed 20 top-selling models, representing 51% of the 2025 sales market. The VW Group introduced the most impactful upgrades in 2025 because of the utility-factor correction. Improvements across five VW models offset 90% of the increase in official emissions associated with the correction.

For example, VW’s Tiguan electric range more than doubled, from 55 km to 119 km, while official emissions stayed at 36 gCO₂/km, up from 32 gCO₂/km before the correction, helping drivers save fuel by running longer in electric mode.

Manufacturers could further improve their vehicles under the next utility factor correction by increasing electric range or combustion-mode efficiency, improving aerodynamics, using lighter materials, and improving energy recovery.

Freezing the rules at the 2025–2026 level would continue to underestimate real-world PHEV emissions by 56% and significantly reduce the number of BEVs carmakers need to sell to comply with the 2030 target, according to T&E.

Mathieu says: “A decade after Dieselgate, it is outrageous that Europe is once again debating whether to keep using misleading emissions to sell cars. In ongoing negotiations on cars CO₂, the European Parliament and Council have a clear choice: protect drivers’ wallets or allow carmakers to continue lying to consumers. Drivers deserve the truth, not another fix to protect carmakers’ profits while leaving drivers hundreds of euros out of pocket.”

Rapid transition benefits

“Setting targets on companies to go electric and limiting financial support only for company cars that are electric and Made-in-EU would see economic gains of €20 bn and boost investments by €18 billion,” says T&E.

EU-wide electrification targets for large fleets, combined with limiting national fiscal benefits only to electric Made-in-Europe company cars, would bring 344,000 additional jobs and €18 billion in extra investment to Europe’s economy and automotive industry by 2030, according to a new T&E study. Even under a moderate scenario, an extra 196,000 jobs would be created.

The Clean Corporate Vehicles Regulation requires 45% of new car sales in large corporate fleets to be electric by 2030. This establishes a minimum floor for fleet transition. Strictly limiting financial support for company cars from January 2028 (Article 4 of the Regulation) to vehicles that are low and zero emissions and Made-in-Europe triggers the biggest gains.

T&E analysis shows that in the strong scenario, where combustion cars are pushed out of company fleets much faster,as a country like belgium is doing, 69% of new cars in large corporate fleets could be electric by 2030, generating 344,000 additional jobs.

Economic gains could also jump from €28 billion to €48 billion, while investments could grow from €20 billion to €38 billion. Germany and Poland stand to reap the greatest benefits. Demand for additional jobs in Germany could rise by 134,000 (39% of the additional EU jobs), while Poland could capture 38,500 jobs more.

Sofie Grande y Rodriguez, Clean Fleets Policy Manager at T&E, said: “Company cars are the quickest way to turn Europe’s EV transition into European jobs. Lawmakers have the opportunity to make the company cars regulation a key driver of Europe’s automotive competitiveness. Watering down its ‘Made-in-EU’ requirements would remove the incentive for carmakers to localise production. Equally important for securing at-risk jobs is keeping 2028 as the entry-into-force date.”

Serious about China threat

The question is no longer how fast e-mobility moves, but whether the EU is serious about competing with China, T&E warned. Failing to seize the demand potential of the regulation would be a historic misfire at a time when European carmakers could easily expand EV capacity to protect jobs. Volkswagen serves as a case in point: while the group plans to cut 35,000 jobs by 2030, the new regulation alone could generate up to 56,300 additional direct jobs at the automaker over the same period.

Beyond vehicle manufacturing, the regulation would drive investments across the entire electric vehicle supply chain. In Poland, battery cell production could more than double (31 GWh to 81 GWh) by 2030 and jobs could increase by 38,500, 82% of which would be in the battery sector. Both the Volkswagen case study and the Polish one usestrong scenario results.

Sofie Grande y Rodriguez again: “Electrifying the fleets of large companies is key to securing Europe’s EV value chain and reducing our dependence on dominant global suppliers. Europe already assembles most of its electric company cars. What it needs now is guaranteed demand, so the battery plants announced here actually get built. To stop losing ground to China on EVs, Europe must bet on Made-in-EU electric company cars.”