The Arval Mobility Observatory has published a new white paper, “Understanding Total Cost of Ownership (TCO): 2025 Outlook & Strategic Levers for Managing It,” examining how macroeconomic factors and electrification are reshaping the economics of fleet management.
The report finds that the sharp rise in Total Cost of Ownership between 2020 and 2025 — as much as 30% in some cases — has been driven primarily by macroeconomic inflation, rather than the transition to electric vehicles (EVs). The findings suggest that fleet costs have increased due to factors such as higher vehicle prices, rising energy and labour costs, and increased financing rates.
The white paper includes a detailed comparison of TCO across powertrain types in the C- and D-segment passenger car categories, highlighting the ongoing cost debate between battery-electric vehicles (BEVs) and internal combustion engine (ICE) models.
To better understand the drivers of cost evolution, the report models two fleet scenarios from 2020 to 2025:
- Scenario 1: A 100% ICE vehicle fleet with no electrification.
- Scenario 2: A gradual transition to 50% BEVs by 2025.
The analysis concludes that while electrification plays a role in changing cost structures, broader economic inflation remains the dominant factor behind rising TCO levels.
In response, the white paper identifies five key strategies that organisations can implement to manage fleet costs without undermining sustainability or operational efficiency:
- Selecting and rightsizing the right vehicles
- Optimising contract terms
- Encouraging eco-driving among employees
- Developing efficient charging strategies
- Exploring alternative mobility models
As the fleet industry adapts to electrification, regulatory change, and market volatility, the Observatory argues that TCO is becoming a central component of strategic decision-making. It stresses the importance of integrating financial, operational, and technological factors to balance cost control with long-term sustainability objectives.
“TCO is becoming a strategic compass, guiding organisations through the complexities of a rapidly evolving automotive landscape,” said Dan Boiangiu, International Arval Consulting & Arval Mobility Observatory Director.
“By embracing a comprehensive view of costs and trade-offs, fleet managers can align operational choices with long-term objectives. Through this white paper, we share insights that help turn complexity into opportunity.”
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