Electric van grant scheme: A good deal?

Justine Greening, Transport Secretary: "It's good for business, but also good for the environment"

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The government has come up with a list of the first electric vans eligible for a hefty subsidy under its new plug-in grant.

The scheme, which was first announced last month, means buyers can get 20% off the cost price of a new vehicle, up to a maximum of £8,000.

Sounds like a great deal? Well, that depends.

This scheme is actually an extension of the plug-in grant launched for ordinary domestic cars last year.

Under that scheme anyone buying from a list of eligible vehicles (they have to meet a list of criteria for safety, range and low emissions) can get up to £5,000 off the showroom price.

Yet despite the deal, take-up has been slow. Government figures show there were just 892 applications made for the plug-in grant in 2011, despite the fact that several big manufacturers launched new, electric models for the first time.

The bulk of those applications also came in the first quarter of the year, with the figure tailing off to just 106 for the final three months.

'Business sense'

Still, the government is determined to fund electric motoring for at least another three years, as part of its plan to meet ambitious emissions targets.

Electric vehicle motor being switched on 2011 did not prove to be the year of the electric car as had been predicted

"Our new grant demonstrates that you can be a motorist and still be pro-environment," says Transport Secretary Justine Greening.

"The new plug-in grant also makes business sense as it's been estimated that a small electric van will typically cost £100 less in fuel for every 1,000 miles driven compared to a diesel equivalent."

It is not just the grant either. If you drive an electric vehicle you can benefit from zero-rate company car tax and you won't pay the congestion charge in London.

There are plenty in the industry that believe electric motoring is currently more suited to business use than to domestic use.

Think of all those white vans dashing around your town or city.

They will cover no more than 100 miles in a day (that's the rough range of an electric van), and the companies don't use them at night, so it is easy to plug them in at the depot ready for the next day.

Pros and cons

In the end, it will come down to money.

On the negative side, electric vans can be double the price of a diesel equivalent, and that is mainly down to the cost of the battery.

Dame Ellen MacArthur Yachtswoman Dame Ellen MacArthur is a high-profile supporter of electric vans

The battery provides another problem too. Let us say it lasts seven years, or 100,000 miles. After that, you have to pay to replace it, and that is thousands, maybe tens of thousands of pounds.

Interestingly, Renault have a scheme where you rent the battery off them which takes the cost right down.

On the positive side, electric vans don't need as much servicing because they have fewer moving parts. There are the tax breaks, and the simple cost per mile of electricity is substantially less than diesel.

And they have some high-profile backers, including Dame Ellen MacArthur, whose charity, the Ellen MacArthur Foundation, uses an electric van.

"Today's announcement means people will have more choice about the kinds of vans they can drive and I am pleased to support this initiative," Dame Ellen says.

The fact is, no-one knows which future technologies will take off and which will stall.

Hydrogen, bio-fuels, electric - all have their pros and cons and it is far too soon to say which will dominate our roads in the future, or indeed, if something else will come along in the meantime.

2011 was being hailed as the year of the electric car. Frankly, that did not happen.

This subsidy will give the market a big boost for 2012.

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