Plans for a new type of tram to replace Blackpool's ageing fleet are on hold after a prototype caught fire during testing on the promenade.
The single-decker tram was severely damaged
An electrical fault is believed to be the cause of the fire, which started underneath the cabin on Wednesday.
The city class tram, which has done more than 10,000 test miles in the resort, was weeks away from being approved to carry passengers.
Testing of the tram is set to continue after it is repaired next week.
Fire crews from South Shore station were called out to tackle the blaze, which happened on a closed section of track on the promenade.
The single-decker tram suffered severe fire and smoke damage and its driver was taken to hospital suffering from smoke inhalation.
Dave Hislop, of Blackpool Transport, said the magnitude of the fire was "eye opening".
The vehicle was a prototype of a city class tram, designed by a company called Trampower and developed over the last 10 years.
It is billed as an affordable tram which costs operators less to buy and run than other models.
The tram can hold up to 200 people, but is yet to carry fare-paying passengers in the resort.
Professor Lewis Lesley, its designer, said: "We are totally shocked because we've been running now for over nine months and had no incidents or serious problems.
"We were weeks away from completing the mileage that we had agreed with Blackpool for trouble-free running before we applied for passenger service approval."
Plans to apply for a licence to carry passengers is now on hold while further testing of the tram takes place.