Hybrid cars for business in 2026: How to optimise fleet and costs with full-service leasing

2026. The year marks a major turning point in corporate mobility, where sustainability is often no longer a choice but a legal necessity. Rising fuel prices and stricter CO2 quotas are forcing companies to rethink their transport strategies.

In this article, we will analyse why full-service car leasing in the hybrid segment has become a common business standard in Latvia.

With more than 30 years of experience in the Latvian market, MyAvis helps companies navigate the complex tax and technology environment on a daily basis. By choosing the right solutions, companies can gain benefits ranging from the optimisation of their RTGS to the peace of mind that full-service operations can bring.

Switching to hybrid cars can be an important step towards a greener future. Individual results and savings may vary depending on the specifics of the fleet.

Contents

• Why are hybrid cars the business standard in 2026?
• Full-service car leasing versus classic car ownership
• Financial benefits: deduction of UVTN and VAT
• The most popular hybrid car models for business
• FAQ – Frequently asked questions about car finance
• Research limitations and alternative mobility strategies
• Conclusions
• References

Why are hybrid cars the business standard in 2026?

Hybrid cars, especially plug-in hybrids or PHEVs, are becoming standard in company fleets as they can offer flexibility between urban electric and inter-city travel while potentially significantly reducing a company’s CO2 footprint.

Detailed analysis of sustainability data for the Latvian marketwhich examines the transition to electrified transport, researchers found that switching to a hybrid or electric fleet can reduce CO2e emissions by around 35-40% in Latvian conditions[1].

Such a green fleet can help a company not only to build its corporate reputation, but also to prepare for stricter requirements in the future.

Corporate mobility today is closely linked to environmental, social responsibility and governance (ESG) objectives. According to European Commission’s Corporate Sustainability Reporting Directive (CSRD), larger companies are required to start reporting “Scope 3” emissions, which include their transport-related carbon footprint[2].

This means that ESG targets and corporate mobility are no longer inseparable concepts, and the decarbonisation of the fleet is becoming an essential priority. The integration of hybrid cars can serve as an effective transition phase to help companies gradually adapt to these requirements.

Car financing and strategic refurbishment can make this process much easier by reducing the initial capital burden.

Moreover, looking at market trends, companies are increasingly focusing on the total cost of ownership (TCO) rather than just the initial purchase price.

Hybrid car technology can help optimise everyday costs, especially if employees regularly make short journeys within city limits where the full benefits of an electric motor can be exploited.

While the initial cost may seem higher, in the long run lower taxes and reduced fuel consumption can bring significant financial benefits. By planning routes properly and providing charging facilities in the office or at employees’ homes, companies can maximise the benefits of hybrid technology.

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Full-service car leasing versus classic car ownership

The main difference between these models is the delegation of risks – full-service car leasing can help protect a business from unpredictable battery maintenance costs and sharp drops in residual values.

Buying a classic car and keeping it on the company’s balance sheet often means that all the risks associated with maintaining, repairing and reselling the vehicle are borne by the owner.

In contrast, full-service leasing allows a company to pay only for the use of a car for a set period of time, transferring the risks of resale and technological obsolescence to the service provider.

Risk management has become particularly important today. Technology is advancing so fast that a fixed future value serves as a safety net for a company’s finances. Global asset finance company study shows that full-service leasing can serve as a safety net against sharp fluctuations in residual values in the hybrid and electric car segment[3].

This residual value risk is one of the main reasons why companies choose to move away from the classic concept of ownership.

By choosing professional fleet management services, companies can plan their cash flow more accurately and avoid unexpected expenses.

In addition to mitigating risks, full-service leasing includes all necessary day-to-day maintenance costs in one fixed monthly payment.

According to Data from the European Leasing Industry Representation, maintenance costs for electric and hybrid vehicles can be around 30-50% lower than for internal combustion engine (ICE) vehicles[4].

This means that by integrating hybrid cars into its fleet through such a model, a company can not only reduce its administrative burden, but also potentially optimise its overall operating costs.

This approach can help company management to focus on their core business, leaving the technical and financial issues of mobility to experts in the field.

Financial benefits: deduction of UVTN and VAT

Latvian legislation in 2026 continues to support low-carbon transport through differentiated tax rates, which can bring significant financial savings for companies. Company car tax 2026 The new car choice scheme for 2010 is structured to encourage more environmentally friendly car choices.

In the official information of the tax administrator states that from 2025, the rates of the Vehicle Exploitation Tax (TEN) will increase by around 10%, but for hybrids they are graduated according to CO2 emissions[5].

This means that vehicles with lower emissions can have a significantly lower tax burden.

The deduction of VAT on cars is also an important aspect. Under the current rules, companies can deduct 50% of the input VAT on the purchase, lease and maintenance costs of hybrid cars.

If the vehicle is used exclusively for business purposes and is properly documented, full deduction of VAT may be possible in certain cases.

However, it is always important to take into account the threshold for a representative car, which is currently set at €75,000 + VAT.

Cars worth more than this amount may be subject to different tax deduction rules. Individual tax savings may vary depending on the specifics of a company’s business and accounting policies.

To better understand potential savings and plan budgets, businesses may find it useful to familiarise themselves with current price list of serviceswhich helps to clearly estimate all costs related to car maintenance.

Table 1: Tax comparison in 2026 (Indicative)

As the table below shows, hybrid cars can offer a balanced solution between everyday usability and tax optimisation. Lower UVTN rates and a moderate TEN payment can significantly reduce the overall fleet maintenance costs in the long term.

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The most popular hybrid car models for business

When choosing the right vehicle for your business, it is important to consider not only the purchase price, but also the total cost of ownership, reliability and employee comfort.

Here are some of the most sought-after models on the Latvian market. Individual experience and fuel consumption may vary depending on driving style.

Volkswagen Tiguan PHEV – German quality

The Volkswagen Tiguan PHEV can be the ideal choice for drivers who want to get a lot of mileage out of their car in pure electric mode. The latest generation PHEVs can travel up to 100 kilometres on electricity alone, which can be enough for everyday city journeys.

This model can combine traditional German engineering quality with modern sustainability technologies, offering a dynamic and quiet driving experience.

Toyota RAV4 Hybrid – The versatile solution

The Toyota RAV4 Hybrid offers an excellent balance between space, comfort and reasonable maintenance costs.

It is particularly well suited for companies whose employees often have to travel regionally, where charging infrastructure may not be consistently available.

Its self-charging system can help reduce fuel consumption without the need to connect to the mains.

Lexus NX – The premium choice for driving

Every day, company management needs a vehicle that combines the highest levels of comfort, prestige and compliance with corporate sustainability goals. The Lexus NX can offer sophisticated design and quiet running while maintaining relatively low UVTN rates thanks to hybrid technology.

The various reviews of the Lexus NX PHEV tend to highlight the car’s reliability and high-quality interior trim.

If you are considering a premium vehicle, you can also take a look at similar Lexus hybrids, which can help you find the right solution for your company’s senior staff.

FAQ – Frequently asked questions about car finance

Why choose a full-service car leasing service for hybrid cars?

By choosing car finance for hybrid cars, a company can obtain predictable cash flow and avoid the risk of technological obsolescence. Hybrid technology is advancing rapidly, so this model makes it easy to replace a car with a newer model after 3-5 years. In addition, as part of a full service, all maintenance is usually included in one invoice.

What is the VAT deduction for hybrid cars?

Under Latvia’s VAT law, businesses can deduct 50% of the input VAT on the lease, purchase and maintenance costs of hybrid cars. If the car is used exclusively for business purposes and is equipped with GPS route control, a 100% deduction may be possible in certain cases. It is important to remember the threshold of €75,000 + VAT for a representative car. Consult your accountant for specific cases.

Do hybrid cars have to pay UVTT?

Yes, hybrid cars are normally subject to Business Passenger Vehicle Tax (CPVT), but the rate depends on the engine power. Low emission models (e.g. PHEVs up to 50 g/km) can have significantly lower rates than conventional petrol or diesel engines. This makes a full-service car leasing solution for hybrids more financially attractive. Tax rates are subject to revision in line with changes in the national budget.

Research limitations and alternative mobility strategies

While hybrid cars can offer significant benefits, it is important to recognise the limitations of research and the variables of real life. The actual fuel consumption of a hybrid car depends directly on the charging discipline.

Various industry studies, such as from the International Council on Clean Transport (ICCT), indicate that without regular charging, PHEV efficiency can drop significantly towards that of conventional combustion engines.

In addition, the long-term durability of batteries in Latvia’s harsh winter conditions is still being studied, and cold weather can temporarily reduce electrical performance. Companies therefore need to carefully assess their employees’ daily routes and promote a responsible charging culture in order to meet their sustainability targets.

Alternative approaches include a fully electric fleet (BEV), which can be particularly well suited for companies with lower urban mileage and affordable charging infrastructure in the office.

In summary, hybrid cars offer an optimal balance between CO2 reduction and everyday practicality. We would like to underline that full-service leasing will be available in 2026. The European Green Mobility Fund (EGM), launched in 2010, is a key instrument to mitigate financial and technological risks that can help companies make a safer transition to greener mobility.

As a reminder, a properly structured transaction can also bring significant tax benefits by optimising both the deductibility of VAT and the deductibility of VAT. Individual savings may vary depending on the size of the fleet and the specificities of use.

As a mobility expert with 30 years of experience, MyAvis can offer a tailor-made fleet audit to help you find the best hybrid car solution for your business.

Our team can help you calculate the exact TCO and potential tax savings for your specific mileage and business needs.

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References

1. Detailed analysis of sustainability data for the Latvian market
2. European Commission’s Corporate Sustainability Reporting Directive (CSRD)
3. Global asset finance company study
4. Data from the European Leasing Industry Representation
5. In the official information of the tax administrator