Announced by transport minister Norman Baker and business minister Mark Prisk, the extension is aimed at making electric and plug-in hybrid commercial vehicles more accessible to consumers and businesses.

Vehicle manufacturers must apply for their vans to be eligible for the discounts, and applications are being taken now, with the deadline for the first set of approved vans set as the 31^st January.

To be eligible, the van must be new, emit less than 75g/km CO2 and offer at least a 60 mile electric range (10 miles for plug-in hybrids) with a top speed of 50mph or more. All vans must be EC whole type approved with evidence that it meets appropriate safety levels compared to a conventional rival.

To assure buyers about the longevity of the drivetrain, the vans must have a minimum of a three year, 60,000 mile warranty on the drivetrain, with a five year guarantee on the battery (or proof of high performance lasting over three years).   

Transport Minister Norman Baker said: ‘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.’

Business Minister Mark Prisk added: ‘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.’

As part of the announcement, the Plug-In Car Grant was confirmed until 2015. In the UK, ten models are eligible for the grant, which offers up to £5,000 off the purchase price of a new car. Of those, five are available now, with the remainder set to go on sale before the end of 2012. Last year, 1052 vehicles were sold with the discount, while another 892 customers made applications to buy a car with the grant. 

The announcement has been welcomed by the industry, including BVRLA chief executive John Lewis, who said: It is great that the government has listened to the feedback from business fleets, who have spent the last year telling the government that the van market was crying out for this sort of low-carbon incentive. Electric vans are very expensive, but the combination of this grant, much lower running costs and some significant tax benefits will enable many fleets to take the plug-in van plunge.

'As well as identifying which vehicles will qualify for the grant, we hope that the government will learn the lessons from its introduction of the plug-in car grant by moving much more swiftly to clarify how the grant will be treated for VAT purposes.'