It has confirmed that the current version of the grant, worth up to £5,000, will end this year, at a date yet to be confirmed. Until that date, OLEV has said that it will honour any deal placed on its system for a qualifying car, provided that the vehicle has been allocated to a customer and is delivered and registered within nine months.

The BVRLA had sought the confirmation from OLEV to combat growing uncertainty within the leasing sector, which had led a number of companies to remove the £5,000 grant from their quotation systems.

“We are delighted that OLEV was able to provide this speedy and common-sense response to our members’ concerns. Losing the £5000 subsidy would have a major impact on a monthly lease rental, so leasing companies need to know that their quoted price won’t be hit because the vehicle lead time extends beyond the plug-in grant’s cut-off date,” commented BVRLA chief executive, Gerry Keaney.

“Registrations of ultra-low emission vehicles have taken-off in recent months and the rental and leasing industry has been leading this charge. The uncertainty surrounding the grant was threatening to hike lease prices for ULEVs and reduce their appeal to prospective customers.”

The Plug-In Car Grant was originally launched in 2011 to increase the take-up of ultra-low emission vehicles. Under the scheme, motorists can receive a 35% discount off the basic price of an eligible car, worth up to £5,000.

In April 2015, OLEV announced that the grant would be reviewed, and qualifying vehicles would be classed in three separate categories, based on CO2 emissions and zero emission range. Category 1 vehicles must have CO2 emissions of less than 50g/km and a zero emission range of at least 70 miles, while Category 2 is for vehicles which emit less than 50g/km CO2 but can only travel between 10 and 69 miles on electricity alone. Meanwhile, Category 3 vehicles are classed as those which have CO2 emissions of 50-75g/km and a zero emission range of at least 20 miles.

For now, each of these three categories is eligible for the full 35% discount, but the BVRLA believes this is likely to change in the coming months. Around £200m has been set aside to continue the grant scheme from 2015 to 2020, but the grant amounts made available to cars in each of the three categories may need to differentiate, in order to prevent money for the scheme running out before 2020.

OLEV will also be reviewing the van grant in due course, but this is to remain at 20% up to £8,000 until further notice, as there have been 1,500 van claims to date, compared to over 25,000 car claims.