From 1 January 2011, the Peugeot iOn four-door electric car is available with a £5,000 subsidy from the government after being included in a nine-strong list of eligible cars.
However, the £5,000 will not be deducted from the purchase price of the car because it will only be available on a four-year leasing deal.
The money will be deducted from the monthly payment of £415 (before VAT) which also includes a warranty for the battery as well as servicing and maintenance.
The Peugeot iOn is the car maker’s first all-electric vehicle to be mass produced and joins the almost identical Mitsubishi i-MiEV, which was built using the same platform, and the smart fortwo electric drive as the three cars available in January under the scheme.
They will be joined by the Citroen C-Zero, which also shares a platform with the iOn and i-MiEV, early in 2011.
Other cars set to be available under the grant include the Nissan Leaf and Tata Vista in March 2011. The Tata Vista is a budget brand from the company which owns both Jaguar and Land Rover.
Finally, the Vauxhall Ampera and identical Chevrolet Volt extended-range electric vehicles will arrive early in 2012 alongside the new Toyota Prius Plug-in Hybrid.
The government has promised to invest £20m to develop low-carbon infrastructure to build on an electric charging network already identified for eight locations across the UK.
These include London, Milton Keynes, North East England, Midlands, Greater Manchester, East England, Scotland and Northern Ireland.
Labelling the scheme as a ‘great opportunity’ for the UK motor industry, Chief Executive of the Society of Motoring Manufacturers and Traders (SMMT) said: "The Plug-In Car Grant will support the delivery of practical, low carbon vehicles and we will see further progress of new and conventional technologies in the years ahead."