“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.

From January 2011, fleets and private buyers will be entitled to a grant of up to 25% off the list price of the eligible car, up to the value of £5,000.

Qualifying cars are electric, plug-in hybrid or hydrogen fuel cell cars that meet safety, reliability, performance and warranty standards (see end of article for exact requirements).

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