Plug-in hybrid electric vehicles can use either fossil fuels or electricity and offer potential emission reductions, depending on the driver’s usage. This column examines how access to charging at home influences the share of driving that employees with company cars in Germany do using electricity. Access to home charging reduces the users’ fossil fuel consumption by 38% and thus cuts CO2 emissions, which fall even where there are no binding caps on emissions from the electricity sector. Access to home charging also increases the likelihood that users will switch to fully electric vehicles in the future.
As European policymakers intensify efforts to reduce CO₂ emissions from road transport, plug-in hybrid electric vehicles (PHEVs) are promoted as a promising solution. Unlike fully electric vehicles, PHEVs can operate using either fossil fuels or electricity. This capability offers potential emission reductions from drivers who are reluctant to adopt a fully electric vehicle (EV) due to concerns about their limited driving range. However, whether PHEVs contribute to lowering CO₂ emissions in the transport sector depends on how they are used. Increasing the electric use of PHEVs causes no incremental CO₂ emissions in Europe because the electricity sector is subject to a binding cap on emissions. In contrast, PHEVs have no advantage over conventional cars when operated with gasoline or diesel.
When policymakers subsidise PHEV adoption, they ignore this behavioural margin and instead cite the rated CO₂ emissions of cars, which are much lower than vehicle emissions on the road (Reynaert 2020). According to a recent report by the European Commission (2024), on-road emissions of PHEVs exceed their rated emissions by a factor of 3.5 (Figure 1).
Figure 1 Comparing emissions of PHEVs in type-approval tests and on the road
Notes: On Road = emissions per km observed on the road. Type Approval = emissions per km according to the Worldwide Harmonized Light-Duty Vehicles Test Procedure, i.e. in European type approval tests for cars. EU Fleet = average emissions for the entire fleet of PHEVs in Europe which already report on-road emissions (numbers based on Commission Report COM/2024/122). No Home Charger = average emissions of PHEVs in our sample before gaining access to charging at home. Home Charger = average emissions after these PHEVs gain access to charging at home.
Instead of giving up on the idea that PHEVs could contribute to decarbonising the transport sector, however, we propose that policymakers should incentivise their proper use to unlock their potential for emissions reductions.
Two key tools: Financial incentives and charging infrastructure
On one hand, policymakers can encourage electric driving by making it cheaper to charge: Recent research by Bailey et al. (2025) and Grigolon et al. (2024) shows that electric charging increases in response to both lower electricity prices and higher fuel prices.
On the other hand, policymakers can make charging more convenient by providing adequate infrastructure. While the availability of public charging stations has been shown to increase EV adoption (Li et al. 2017), there is limited empirical evidence on how charging infrastructure affects the use of EVs. Surveys show that users of EVs prefer charging at home (Barber et al. 2024) and that the inconvenience of public charging remains a substantial deterrent to EV use (Krishna 2021). This suggests that boosting access to charging at home could increase the electric driving share of PHEVs by reducing the non-monetary cost of charging. In a new study, we provide causal evidence for this effect (Gessner et al. 2025).
Home charging as a catalyst for PHEV emissions reductions and fully electric vehicle uptake
We leverage quasi-experimental variation in the rollout of home chargers among employees of a large German company who drive a company car as a fringe benefit. While the energy consumed by these vehicles (both fossil fuels and electricity) is paid for by the company, employees in our study can use their company car for private trips, too. The company is compensated with a fixed monthly deduction from the employee’s net salary. This setup – which is very common in Germany and other European countries, thanks to favourable tax rules – provides us with a unique opportunity to study the effects of charging infrastructure in isolation from potentially confounding financial incentives.
We have data on all electric charging and refuelling transactions of 856 employees with a PHEV company car and 407 employees with a fully electric vehicle (EV) as a company car in the period 2020–2022. A first look at these data suggests that access to charging at home virtually closes the gap between on-road emissions and specific emissions given in official ratings of the PHEVs in our sample (see Figure 1).
Quasi-experimental estimates, which we derive from the staggered introduction of home charging stations among qualifying employees, confirm this: access to home charging more than quadruples the electricity consumption of PHEV users while reducing their fuel consumption by 38%. CO2 emissions are cut by the same amount, since emissions from the electricity sector are limited under the cap set by the EU Emissions Trading System. Employees who gain access to home charging tend to drive an additional 671 kilometres per quarter. This rebound in terms of mileage may reflect increased convenience and lower non-monetary costs associated with home charging. Despite the increase in mileage, total energy expenditures fall by 23% due to the shift from fossil fuels to electricity.
Under the counterfactual assumption that electricity generation causes additional CO2 emissions, we find that emissions still fall by 14%. Thus, the emissions-reducing effect of access to home charging is not an artefact of the European regulatory environment and could thus be expected in countries that do not impose a binding cap on emissions from the electricity sector. The magnitude of the effect will depend on the emission intensity of the local electricity mix.
What is more, when choosing a new company car, employees who have experience with access to home charging are 28 percentage points more likely to opt for an EV. These findings indicate that home charging enhances the feasibility and convenience of electric driving, thereby encouraging the long-term adoption of zero-emission vehicles. For EV drivers, access to home charging has no significant effect on energy expenditures.
Home charging infrastructure: Financial viability and CO2 abatement
From a corporate perspective, investing in charging infrastructure at the homes of employees proves to be financially attractive. We combine our effects on vehicle use and vehicle adoption in a scenario analysis and estimate abatement costs under different assumptions about the diffusion of BEVs. The CO2 emission abatement and the net present value of the investment depend on how long employees use the home charger and on the likelihood that users adopt an EV as their next company car (Figure 2).
Figure 2 Emission abatement and monetary cost of the installation of a home charger (per charger)
Notes: Left panel: CO2 abated by access to home charging. Right panel: Net present value of the investment into a home charger (initial investment minus discounted energy cost savings). Three different scenarios regarding the diffusion of BEVs are considered. Scenario 1 assumes that 28% of employees previously holding a PHEV choose a BEV and a PHEV otherwise. Scenario 2 assumes that all employees choose a BEV after 4 years. Scenario 3 assumes that all employees (continue to) choose PHEVs. All scenarios start from a population of PHEV drivers and assume that a home charger lasts for at most 20 years. Once employees adopt a BEV, they do not go back to a PHEV.
Total abatement per charger can amount to almost 19 tons of CO2 emissions over a 20-year period (left panel of Figure 2), while the initial investment pays off for the company after about eight years (right panel of Figure 2). Since access to charging infrastructure changes neither energy costs nor emissions of EVs, environmental and monetary benefits from access to home charging accrue only as long as employees hold a PHEV company car.
Policy implications: Condition support for PHEVs on access to home charging
Companies aiming to reduce the carbon footprint of their corporate car fleet should reimburse employees for charging company cars at home and pay for the necessary equipment. Our analysis provides evidence that home chargers reduce corporate carbon emissions at low or even negative levelised costs, making them competitive with international carbon offsets. Allowing employees to gather experience with charging a PHEV at home accelerates the diffusion of fully electric company cars, which is a milestone for permanently reducing CO2 emissions from corporate car fleets.
This has important consequences beyond the corporate context because corporate fleets constitute a large share of new passenger car registrations in many European countries. As company cars are regularly replaced, the diffusion of electric company cars via the used-car market could accelerate the decarbonisation of road passenger transport. While this points to a case for government subsidies on home chargers, in times of scarce public funds, it might suffice for policymakers to reduce administrative barriers to installing home chargers and to actively mandate installation rights for renters.
As previous research has shown, policymakers designing subsidies for electric mobility are well advised to also consider externalities other than greenhouse gas emissions, such as air pollution (Holland et al. 2015), external costs imposed on the electricity sector (Heid et al. 2024), and positive effects on innovation (Barwick et al. 2024).
Given the current user behaviour characterised in Figure 1, replacing conventional cars with PHEVs causes little CO₂ emission abatement. Our research shows that access to home charging can change that by encouraging electric charging. Thus, purchase subsidies for PHEVs should not be granted unless drivers have access to charging at home. While our findings are based on a sample of company car drivers, we expect that the non-monetary aspects of access to home charging that drive our results extend to privately owned PHEVs as well.
Conclusion
Our study shows that home charging infrastructure significantly reduces CO₂ emissions from PHEVs and lowers their energy costs, making them a more sustainable and economically viable option. Moreover, providing access to home charging not only improves the environmental performance of PHEVs but also increases the likelihood that users will switch to fully electric vehicles in the future. To maximise the environmental benefits of PHEVs, policymakers should therefore condition support for these vehicles on the availability of home charging, enabling PHEVs to act as an effective bridge towards fully electric mobility.
Source : VOXeu
