Grants worth up to £5,000 on offer as Labour commitment honoured.
The coalition government is to uphold Labour commitments to electric car subsidies despite planned massive cuts to public spending.
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It is thought that pressure from Renault-Nissan, the automotive alliance making an early push for mass electric vehicle sales, convinced the government to ring fence the subsidy money.
Renault, which will release an electric Kangoo van in mid-2011 as the first of four EV launches, welcomed the grant.
Renault UK managing director Thierry Sybord said: "With this financial incentive in place, the affordability and lower running costs make the financial argument for electric vehicles, compared to conventional fossil-fuelled vehicles, as compelling as the environmental one."
Richard Lawton of ContractHireAndLeasing.com, was positive but pointed to "several grey areas" clouding potential uptake for EV leasing.
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By GlobalDataLawton said: "First, the industry needs to agree on a way to accurately value the residual of an electric car before competitive finance products can be developed.
"Secondly, the government will need to widely publicise which cars will be eligible for the grant."
From January 2011, all purchasers of electric cars will benefit from a grant worth 25% of vehicle price, up to a maximum of £5,000.
The amount of funding available for electric subsidies has been reduced dramatically, from £230m to £43m. The diminished pot will have to last until 31 March 2012, when the programme will be considered for renewal.
Faye Sunderland of thegreencarwebsite.co.uk, said sales projections for first generation EVs suggest that the money will easily last the length of the subsidys first term.
The coalitions autumn spending review, where the fate of the subsidy was meant to be decided, is yet to take place.
It will be confirmed in the review whether LCVs are to be eligible for grants, although they are thought likely to be.
