Fleets considering electric cars should hold off until next year after the Government confirmed it will pay up to £5,000 towards the cost of new zero-emissions cars.

The Government has committed £230 million to the new ‘ultra-low carbon car incentive programme’.

From January 2011, fleets and private buyers will be entitled to a grant of up to 25% off the list price (up to a maximum of £5,000) when buying an electric, plug-in hybrid or hydrogen fuel cell car that meets safety, reliability, performance and warranty standards.

The grant programme was announced last year. Since then the Department for Transport has been considering two options – either the point-of-sale incentive, which it has now opted for, or a process where lease companies would bid for a slice of the £230 million to subsidise electric car purchases which would then be leased on to end users at a reduced rate.

Despite DfT opting for the point-of-sale incentive, the BVRLA has welcomed the news.

“Business fleets already buy more than half of all cars registered each year so it makes sense that they will be able to take advantage of this incentive,” said its chief executive John Lewis.

“A discount of up to £5,000 is very attractive incentive, but buyers are not stupid. Fleets will need some assurance that the electric vehicle they are buying will have a second-hand value in three, six or even ten years’ time.”

Along with confirmation of the new point-of-sale grant, the Government has also published the qualifying criteria for the cars.

Electric cars must have a minimum range of 60 miles and be zero-emission, although plug-in hybrids car emit up to 75g/km and have just a 10-mile range when powered by electricity.