Petrol, diesel or hybrid... Which vehicle choice is best for businesses?

ANALYSIS - According to the latest edition of the TCO Scope from the Arval Mobility Observatory, the cost of ownership increases more sharply for the internal combustion engine vehicle than for its electric equivalent, but the latter must be analyzed in light of items that are still difficult to grasp.

After reviewing the 82 pages of the 2025 TCO Scope report by the Arval Mobility Observatory, it becomes clear that choosing vehicles is extremely complex for businesses. As in previous years, the study's authors compared the Total Cost of Ownership (TCO) of various energy sources—gasoline, diesel, hybrid, plug-in hybrid, and electric—for both passenger cars and commercial vehicles. Over time, TCO has become the only objective indicator that allows decision-makers and fleet managers to make informed decisions regarding vehicle policy . TCO represents the total budget that the company will incur over the entire vehicle ownership period (price + cost effects).

It takes into account all expenses related to operating a vehicle to determine its total cost and allow for comparison with other vehicles based on the same criteria. The TCO (Total Cost of Ownership) thus includes financing costs at a rate of 7.30% per year over four years, accounting depreciation over five years, the residual value based on estimates provided by long-term leasing companies, as well as maintenance costs, insurance, fuel budget, and tires. The cost per kilometer (CPK) is established based on the average price of energy sources provided by the Ministry of Ecological Transition: €1.65 including VAT per liter of gasoline, €1.55 including VAT per liter of diesel, €0.98 including VAT for ethanol, €0.75 for LPG, and €0.28 including VAT per kilowatt-hour. Charging infrastructure is included in the calculation up to €1,500. The manufacturers' official fuel consumption figures are increased in order to be closer to reality: +20% for internal combustion engines, +15% for hybrids, +300% for PHEVs, and +10% for electric models.

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Once again, overall, the comparisons favor electric models over their internal combustion (gasoline or diesel) and electrified equivalents. The results are more mixed for light commercial vehicles (LCVs), as the electric version only wins one of the six comparisons against its combustion engine counterpart.

This fourteenth edition of the TCO Scope reveals that the total cost of ownership (TCO) is rising, regardless of the powertrain. It increased by 28% year-on-year for internal combustion engine models and by 12% for their electric equivalents. Based on a sample of 200,847 vehicles and an annual mileage of 25,000 km (100,000 km over 48 months), the average weighted total cost after tax is €47,572 for an internal combustion engine vehicle, resulting in a cost per kilometer of €0.476. For a battery-powered vehicle, it does not exceed €42,413, representing a cost per kilometer of €0.425.

In order to accelerate the ecological transition and encourage companies to increase the share of electric models in their fleet, the public authorities completely overhauled taxation at the beginning of the year.

The increase in the total cost of ownership (TCO) of internal combustion engine vehicles is attributable to the burden of taxes and social security contributions. Having risen by 98% with the 2025 Finance Law and the reform of benefits in kind, these now represent the second largest expense. In order to accelerate the ecological transition and encourage companies to increase the share of electric models in their fleets, the government completely overhauled the tax system at the beginning of the year. In addition to the elimination of the ecological bonus for commercial vehicles, the integration of Energy Savings Certificates (CEE), the tightening of penalties for both _CO2 emissions and weight, as well as for vehicle registration tax (formerly TVS) and depreciation, fleet managers have had to take into account the new calculation of benefits in kind (AEN). Since February ^1st , a 70% reduction has been applied to the AEN in its entirety, but only for models eligible for the eco-score. The amount of this allowance is capped, in 2025, at 4582 euros per year.

The TCO Scope study assumed that company vehicles are used partially for personal purposes by employees. Employer social security contributions, set at 50% of the benefits in kind calculated at a flat rate of 20% for internal combustion engine vehicles on the discounted purchase price, were included, assuming the company covers all fuel costs. The positive impact of this contribution on the calculation of corporate income tax was taken into account. For 100% electric vehicles, the electricity costs paid by the employer are not included in the calculation of the benefits in kind. The flat rate for benefits in kind included is therefore 15%. Admittedly, this entire system is extremely complex.

In the city car segment, the study focused on the two best-selling models: the Renault Clio and the Peugeot 208. The Clio, in its 100 hp LPG version or 145 hp hybrid version, was compared to the 150 hp Renault 5 Electric. The results show that the R5 never manages to reach the cost per kilometer (CPK) of the LPG model, primarily due to its higher list price. Similarly, the hybrid version of the Clio has a comparable CPK to the R5, assuming 100,000 km over 48 months. The situation is significantly different for the Peugeot 208. The electric version outperforms its 100 hp gasoline and 110 hp hybrid siblings in almost all scenarios. Only at 60,000 km does the gasoline version remain more economical. From 80,000 km over 48 months, the e-208 wins hands down thanks to a budget difference of €52 to €105 per month, representing a cost approximately 47% higher than internal combustion engine models, which are heavily penalized by the reform of company car tax. The battery-powered vehicle also benefits from a 70% reduction in company car tax.

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The study reveals that as you move up the price range, the gap widens in favor of electric vehicles. This result stems primarily from the discouraging taxation of internal combustion engines. Thus, unlike the previous year, the electric Peugeot 2008 wins all comparisons against its gasoline and hybrid equivalents, which are hampered by mandatory vehicle inspections, the emissions penalty, and other tax implications. The difference is even significant at higher mileages (100,000 km), reaching €0.137 per kilometer with the 100 hp gasoline version and €0.072 with the 145 hp hybrid model. However, this ratio reverses when considering the "business" trim levels. The electric versions are penalized by the elimination of the eco-bonus, as well as by significantly lower residual values. Compared to a 136 hp hybrid 208, the additional cost of a 136 hp e-208 reaches €1,463 over 120,000 km and 48 months. At Renault, the TCO of the 120 hp electric R5 is €3,170 higher than that of the 90 hp Clio Evolution for the same mileage.

At the top of the B-segment SUV market, the total cost of ownership (TCO) of a 171 hp Kia Niro 1.6 GDI plug-in hybrid is €3,415 higher over 100,000 km than that of the Kia EV3 electric vehicle with a 204 hp motor and an 81.4 kWh battery. The difference increases to €3,635 over 120,000 km.

In the C-segment sedan category, the total cost of ownership (TCO) clearly favors electric vehicles. This is the case for the Peugeot 308. Despite a consistently higher list price, the electric version of this sedan from the Franche-Comté region wins every comparison. The tax burden is 283% higher for the mild hybrid and 351% higher for the plug-in hybrid. With energy costs €50 to €100 lower per month, the e-308 seals the deal. However, in this case, the lower the mileage, the more advantageous it is to drive electric. With the plug-in hybrid, the additional cost per kilometer is €0.178 for 60,000 km. It drops to €0.106 for 120,000 km. For its part, the new Peugeot 3008 also sees the electric version taking precedence over the mild-hybrid and plug-in hybrid versions, despite a higher financial lease over 60,000 km and 48 months (+68% compared to the hybrid and +15% compared to the PHEV).

Finally, in the executive car segment, the BMW i4 (eDrive 40i 340 hp) outperforms the 3 Series plug-in hybrid (292 hp) and the 320iX petrol (184 hp) more than ever, despite a list price that is €1,750 and €9,950 higher respectively. The petrol model is penalized by a €4,026 emissions surcharge over the contract term and €392.10/month in premiums for the electric vehicle. In the luxury SUV category, between a Mercedes EQE 350+ and a Mercedes GLE 350 plug-in hybrid, the total cost of ownership (TCO) favors the former. The difference in favor of the electric vehicle reaches €52,630 over 120,000 km.

The electric versions suffer in comparison to the diesel models, although the difference diminishes with mileage.

The results in the commercial vehicle sector are the opposite. Electric versions suffer in comparison to diesel models, although the difference diminishes with mileage. The Renault Trafic electric is the only one to win its duel against its diesel equivalent, and even then, this is due to the vehicle's repositioning. The list price of the battery-powered Trafic has decreased by €2,600 compared to the previous year.

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Beyond the absolute figures that confirm the superiority of electric vehicles over internal combustion engine vehicles in terms of total cost of ownership, one must read between the lines to gain an objective understanding of the study by BNP Paribas' think tank. The realities on the ground are not always fully considered. High-mileage drivers will need to factor in the lost productivity due to charging time and the mental burden associated with the constraints inherent in charging infrastructure. Similarly, the study is based on a rate of €0.28 per kilowatt-hour, significantly lower than what is observed when using fast charging stations while driving. Feedback also indicates repair costs that are 15% higher than for their gasoline or diesel equivalents. This translates into higher insurance premiums.