To a casual observer, it looks no different from a standard modern Mini, the British classic reimagined, to great plaudits, by BMW. But look closer and there's something different about the Mini E, the latest addition to the range.

For a start, there are no back seats. And instead of a grease-caked engine under the bonnet there is a neat and clean arrangement of motors, pipes and electronics. On the dashboard, the rev counter is gone, replaced by a dial to show how much power is left in the car's on-board battery. But perhaps the most noticeable thing is the Mini E's lack of noise: step on the accelerator and the car moves off with only the faintest whisper.

Two years in the making, the all-electric Mini E was unveiled at BMW's headquarters in Munich this week. It has arrived just as the EU agreed to slash emissions standards for cars and the UK science minister, Paul Drayson, called on British industry to take electric vehicles into the mainstream to help the country meet ambitious targets to cut carbon emissions.

About 22% of the UK's carbon emissions come from transport, with 13% of these from private cars. According to a study for the Department for Transport, widespread adoption of electric vehicles capable of a range of 50km or more could cut road transport carbon emissions in half.

"When people get out of the Mini E they smile," said Patrick Muller, the engineer at BMW who led the project. "People hear 'electric car' and everybody has a golf cart in mind or something with a flimsy plastic body. Here you get a full-blown car."

The Mini E is powered by a 150kW electric motor fed by a lithium-ion battery, giving it the equivalent of around 200 horsepower. With a top speed of 95mph, the car will travel 150 miles on a full charge and go from zero to 60mph in 8.5 seconds - equivalent to a standard Mini Cooper.

BMW will produce just 500 of the cars at first, destined for urban trials in California, New York and New Jersey. These cars, available to lease early next year for around $850 per month, will be followed by a further trial of 50 cars in Berlin in the summer. A dozen of the cars in the European trial could come to the UK.

"The urban application is the ideal way to find out about everyday use and all-day capability of electric vehicles," said Alexander Thorwirth, BMW's marketing and operations manager. "We want to investigate the habits of users ... and how electric driving works."

Friends of the Earth's senior transport campaigner,Tony Bosworth, said electric cars had a significant part to play in the solutions needed to cut carbon emissions. "However, battery performance must improve, and the electricity should come from renewable energy sources."

The manufacturers claim the Mini E retains the nimble handling of its petrol and diesel-based cousins, but the performance comes at a cost: the back seats have been replaced by the 250kg battery pack, making the Mini E not only a two-seater but also heavier than standard cars.

To squeeze as much range as possible out of the Mini E's batteries its brakes act as power generators, topping up the batteries as the car slows down with energy that would otherwise be wasted as heat. The battery has a life of around 100,000 miles and can be fully charged in under two hours from a high-power socket. A standard household socket will recharge the battery in around 10 hours.

The Mini, designed by Alec Issigonis, first rolled off the production line in 1959. The current model, which still retains many of the original's distinctive features, remains an iconic vehicle.

Mini enthusiasts welcomed the new car. Paul Mullett, editor of the mini2.co.uk website, said there had been much excited discussion as soon as rumours of the Mini E began circulating earlier this year. "I think it's a step in the right direction," he said. "It helps the whole move to alternative fuels as well. If a brand like Mini start using the technology and they get more people interested, it gets more real as opposed to more obscure, smaller start-ups that people maybe don't know."

The Mini E trial cars will be built at the dedicated Mini factory in Oxford before being shipped to BMW headquarters in Munich to have the electric drive trains and batteries fitted. BMW plans to use the results in the US and Europe to inform the conversion of the remainder of its cars into lower-carbon alternatives.

The Mini E is among the first fruits of BMW's Project i, aimed at making cars of the future more environmentally friendly. "We don't think the internal combustion engine is going to disappear in the next five years, that's clear, but we need to open up alternatives," said Muller.

Last month the government announced a £100m package to accelerate the development and deployment of low-carbon vehicles in the UK. It included £20m to buy electric and low-carbon vans for public sector organisations.