Meridian Vehicle Solutions has scrapped plans to increase ultra-low emission vehicles (ULEVs) in its fleet, blaming the government’s decision to eliminate grants on most hybrid cars and drastically reduce those on zero and near-zero emission vehicles.

Last Friday, the Department of Transport and the Office of Low Emission Vehicles said that starting November 9, grants for buyers of plug-in hybrids would be eliminated, and the contribution towards the least polluting vehicles such as fully-electric cars would fall from £4,500 to £3,500.

Meridian managing director Phil Jerome said the measures were now forcing the company to shelve plans to add more ULEVs to its fleet, since the government was “effectively” adding £2,500 – the average value of the grants being phased out – to the procurement cost of “any future cars that we were thinking of adding to our fleet”.

“This is really disappointing,” Jerome said in a statement. “There is rapidly growing demand from fleets for plug-in hybrids and we made a strategic decision earlier this year to meet that need.

“Really, we are trying to establish these vehicles as the mainstream, even the obvious, fleet choice. However … the truth is that the maths no longer stack up.

“Our hires generally run from three months to a year and, over that period of time, [the cut to grants] puts hundreds of pounds every month on every vehicle, meaning that the pricing is no longer commercially viable.”

Jerome said Meridian had already placed orders for a number of plug-ins, which would still qualify the grant, but the company would “probably have to step back from the plug-in market unless manufacturers cut prices”.

He expressed mixed feelings about the remaining grant for Category 1 vehicles, saying that “almost no models on sale” meet the qualifying criteria of a 70-mile electric range, which he said left fleet operators with no time to prepare.

He also expressed frustration with how the cut would coincide with a rise in company car tax and delays in procurement due to WLTP – and how Brexit uncertainty was adding to the mix.

“It is difficult not to feel that the government is intent on making life as difficult as possible for fleets at the moment,” he said.

“What we need – what we crave – is a level of stability that will allow us to plan better for the immediate and longer term future.”

In a LinkedIn blog post earlier this month, Jerome took aim at the “unbalanced” vehicle excise duty (VED) regime currently in place, calling for the fleet and rental industries to prepare recommendations for a future reform of the system as more ULEVs hit the market.