By Giulio Piovaccari

TURIN, Italy (Reuters) -Auto leasing group Leasys aims to nearly double the share of low-emission vehicles -- electric and hybrid -- in its fleet by next year, CEO Rolando D'Arco said, as rapid changes in electric technology pose challenges for the industry.

A 50-50 joint venture between Stellantis and France's Credit Agricole, Italy-based Leasys is the third largest player in Europe's long-term auto renting industry.

Long-term leasing, which allows customers to rent cars at fixed monthly rates, typically for at least a year, provides an alternative to direct ownership of vehicles. It has become increasingly popular in recent years, driven by corporate clients.

Leasys operates in 11 countries in Europe, with a fleet of over 900,000 vehicles last year and a target to expand it to one million at the end of 2026.

"Our aim is to reach 25% of low-emission vehicles in our fleet by 2026, from 13% today," D'Arco told Reuters in an interview. He referred to EVs and plug-in hybrids as low-emission vehicles.

Sales of EV and hybrid vehicles are showing signs of recovery in Europe, after demand contracted in 2024.

In the first quarter of 2025, European registrations rose 28% for EVs and almost 6% for plug-in hybrids, in a broadly stalling market, data from car lobby ACEA show.

Higher prices, compared to petrol-powered alternatives, were still a barrier, D'Arco said, adding reliable charging networks were also key.

"The main objections from customers are: it's too expensive and where do I charge it?," he said.

Rapid technological change is also an obstacle to a wider adoption of EVs, as they risk to quickly become obsolete.

This makes it hard for buyers to get a clear idea about EV resale value, as most vehicles have been circulating for just a couple of years and a second-hand market has not yet developed, D'Arco said.

"Long-term leasing can offer a form of protection against obsolescence and also uncertainties about maintenance costs," he said.

D'Arco said Leasys' explicit mission was to support Stellantis' efforts to increase its sales mix of EVs and hybrid vehicles, as automakers need to comply with European Union regulation on carbon emissions.

"We're an integral part of Stellantis, so we share its goals in terms of electrification," he said.

Leasys operates with a multi-brand strategy, but vehicles from Stellantis -- whose brands include Fiat, Peugeot, Jeep, Alfa Romeo -- and of Stellantis' Chinese partner Leapmotor currently make up around 85% of its fleet.

Leasys competes with market leader Ayvens, a subsidiary of Societe Generale and No. 2 Arval, part of BNP Paribas.

Long-term rentals represent approximately 25% of new registrations in Europe.

Leasys' clients are mostly businesses, which use fleets, on average, of around 100 vehicles, D'Arco said. Average contracts have a three-year term, he added.

(Reporting by Giulio Piovaccari)