Currently reading: Petrol, diesel, hybrid or electric: which company car is right for you?
The transition to electrified vehicles offers an unprecedented choice of options – and here’s what you need to consider


The diesel engine enjoyed a decade of strong demand in the UK following a reform of the company car tax system in 2002. Designed to incentivise efficient, low-CO2 vehicles, these new tax bands created an almost overnight ‘dash for diesel’ in the fleet sector, doubling its market share to 60% of company cars and slashing average emissions by 15g/km within two years. By 2012, over half of all registrations, including private cars, were diesel-powered.

That market has collapsed quickly since then as public perception has changed, tough emissions regulations have made diesel engines more expensive, and the choice of models has declined. 

Diesel became the least popular fuel choice for new lease cars during 2022, according to the British Vehicle Rental and Leasing Association (BVRLA), and its share of the company car market has fallen behind hybrid and electric vehicles. 

Who should consider a diesel company car? Diesel engines work best for drivers regularly covering long distances, carrying heavy loads or towing trailers. 

Autocar's company car tax calculator shows exactly what you'll pay for every make and model


Petrol is the most popular fuel for passenger cars globally, and it’s benefiting from an influx of investment as manufacturers fill the gap left by diesel engines. With precise fuel injection and ‘mild-hybrid’ technology (a very light form of electrification), a modern downsized petrol engine can be almost as efficient as its diesel counterpart. 

However, a small, turbocharged petrol engine can still be thirsty if it’s working hard, and there’s no company car tax penalty for diesel engines now that all cars have to comply with the same on-road pollution limits. The main advantage is cost and choice: manufacturers typically offer petrol versions across their entire model range, and they don’t require the same expensive pollution control systems as a diesel car. 

Who should consider a diesel company car? For fleets, petrol engines are best suited to smaller, cheaper cars and drivers with relatively low annual mileage.


Fleets were quick to take advantage of tax breaks for full hybrids (sometimes referred to as ‘self-charging’ hybrids) when the first models launched in the UK almost 25 years ago. These usually combine a petrol engine with one or more electric motors, which are used to provide assistance under load and offer a short range on battery power when it’s coasting.

Hybrid company cars overcome some of the challenges of plug-in vehicles for fleets, offering diesel-like efficiency, fast refuelling and removing the need for drivers having to plug in. However, the short electric range means there’s no real CO2 advantage or benefit-in-kind saving compared with a diesel car, and most manufacturers are focused on plug-in hybrids. This means there’s a limited range to choose from.  

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Who should consider a hybrid company car? Today’s hybrids can be a direct replacement for a high-mileage diesel car, but they offer the biggest fuel savings for city drivers. Stop-start traffic offers plenty of opportunities to slip into EV mode. 

Plug-in hybrid

Plug-in hybrids are effectively a ‘full’ hybrid with a larger-capacity battery that you can charge using an external source. With a much longer electric range, typically between 30 and 40 miles, they enable drivers to do most of their day-to-day journeys on battery power and then fill up with petrol or diesel when they need to go further. It also results in significantly lower CO2 emissions, and a reduction in company car tax.

Benefit-in-kind bands introduced in April 2020 have renewed the tax incentives for plug-in hybrid company cars, but they are still a compromised option for long-distance drivers. They rely on regular charging stops to match their published efficiency, take several hours to fully charge and most have a small fuel tank to make space for the battery. 

Who should consider a plug-in hybrid company car? Drivers who can commute on electric power and charge at home and/or at work are best placed to get the most out of a plug-in hybrid.


Sales of new petrol and diesel cars will end in the UK in 2030 and sales of plug-in hybrid cars in 2035, but there are plenty of reasons for fleets to go electric today. These are no longer niche products for city driving. Most manufacturers offer a selection of different vehicle types, often with a range of 200-250 miles between half-hour charging stops. Meanwhile, company car tax incentives were renewed in 2020, just as the tougher WLTP fuel economy test raised the CO2 emissions and tax bands of other vehicles.

Early range concerns are dissolving, but they’re still a potential hurdle. The UK has a well-developed public charging network, but broken or occupied charge points are a common bugbear for long-distance drivers. Options are also still a little limited – especially if you need seven seats or the ability to tow a trailer. 

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However, an electric company car could reduce your benefit-in-kind bill by 90-95%, save your employer money on fuel and servicing costs, and shrink their carbon footprint, too. 

Who should consider an electric company car? Even drivers with large annual mileages can go electric in 2023, but it’s an easier transition if they can charge at home or work. 

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HiPo 289 13 February 2022

Autocar is hugely irresponsible for still trying to push diesel.  Quite aside from the horrendous air quality problems associated with diesel exhaust fumes, that new Euro standards only slightly reduce, not eliminate, there is the massive question of long term resale value.  The reality is that diesel is dead and no-one should be spending hard-earned money on a new one, whether an individual or a company.  Autocar is trying to lure buyers up the garden path to financial loss.  Don't follow them.  The only sensible choice now is pure electric and that is where all the smart money is going.