The association said electric vehicles had, so far, only been available as an alternative to conventionally powered vehicles, but that new models due in 2012, such as the plug-in hybrid (PHEV) Toyota Prius and Volvo V60, and range-extended EVs such as the Vauxhall Ampera and Chevrolet Volt, would make high mileage possible when needed.

Julie Jenner, chairman of ACFO, explained: 'Pure electric vehicles may be suitable for some urban, low mileage fleets, but for the vast majority of businesses they are not viable on a number of counts including operating costs, residual value uncertainty, range and the lack of a viable recharging infrastructure.

'However, the imminent arrival of plug-in hybrids and vehicles equipped with range extenders make the electric option a more realistic alternative for many fleets as some of the concerns, particularly around driving range and recharging, are overcome.

'As these vehicles still have an internal combustion engine they will provide a useful stop gap for fleets that want to show their environmental credentials until fully-fledged electric vehicles are a more viable option.'

The popularity of electric vehicles will also be driven by changing Benefit in Kind tax bands for company cars, with this year’s thresholds tightening up by 5% next April. As such, drivers of vehicles with CO2 emissions under 120g/km will get a tax hike of nearly 50%, whereas those under 99g/km will remain unchanged.

But Jenner added that the £5,000 plug-in car grant, which has only been agreed until 31^st March, needed to be guaranteed for longer to help companies make informed decisions when choosing cars.

'An initial £43 million pot was set aside to fund electric car acquisition, but demand has been so low that only around 1,000 vehicles have been bought. However, that should not put the Government off continuing to fund the scheme,’ she said.

'The fleet industry requires certainty and the ability to plan for the long-term. That can only come with the Government committing to retaining the scheme for several years and announcing grant levels for the next three or four years and not on an annual basis.’