Transport Minister Norman Baker and Business Minister Mark Prisk announced an extension of the plug-in car grant scheme which means that van buyers will be able to receive 20% or up to £8000 off the cost of a plug-in van. The subsidy is aimed at encouraging sales of ultra-low carbon vehicles.

The existing scheme offers plug-in car buyers 25% or up to £5000 off the cost of the vehicle. Ministers have also re-confirmed there is funding secured for this grant until 2015.

Making the announcement, Transport Minister Norman Baker said, "Electric vehicles are the arrowhead for a low carbon revolution in motoring and as more models come to market we'll begin to see sales gather pace. Car buyers have had a year to take advantage of our grant and now it's time for van buyers to get their chance to go electric. This is great news for businesses given the lower running costs of these vehicles – fleet buyers tell us that this is one of the most important factor influencing their decision on what to buy. It is radical initiatives like these which will allow us to create a transport system that both cuts carbon and is an engine for economic growth."

Speaking in support of the move, Business Minister Mark Prisk said, "Supporting ultra-low carbon technology in vans makes sense. An upfront purchase grant, when combined with lower running costs and tax benefits, can make switching to an ultra-low carbon van an attractive choice for businesses. The technology also fits well with a large portion of the van market that rely on short urban trips to and from base."

To qualify for a subsidy, vans will have to meet performance criteria to ensure safety, range, and ultra-low tailpipe emissions. Consumers, both business and private will receive the discount at the point of purchase.

Currently 10 cars are eligible for the Plug-In Car Grant, 5 of which came onto the market in 2011, with the other half expected to be available to purchase this year. During the first year of the scheme, over 1000 eligible vehicles were registered and, up to 31 December 2011, 892 applications were made for the Plug-In Car Grant.