Electric and hybrid vehicles will never take off as mass market cars unless the Government encourages motorists to buy them, academics have warned.
But automotive industry executives accused the Government of undermining attempts to develop and sell low-emission vehicles with a “perverse” decision to increase taxes on them.
They urged the Chancellor to make yet another Budget u-turn and scrap plans to put up income tax for drivers who receive a low-emission company car from their employer.
The warnings were issued at a hearing of the Commons Transport Committee, which is holding an inquiry into the future of low carbon vehicles.
MPs heard evidence from Nigel Berkeley, director of the Applied Research Centre in Sustainable Regeneration at Coventry University, who had been part of a £25 million trial of low carbon technology.
The Government-funded project, called CABLED, involved Coventry, Aston and Birmingham universities, engineers Arup, Coventry and Birmingham City Councils, utility e.on, and vehicle manufacturers Mitsubishi, Tata, LTI, Smart, Microcab and Jaguar Land Rover.
But while manufacturers were willing to produce electric vehicles, and the quality of the cars themselves had increased, the public was reluctant to buy them, he said.
Asked whether Government predictions that “tens of thousands” of electric cars would be on the road by 2015 were realistic, Dr Barkely said: “No, I think it’s very optimistic given the current level of demand.
“There is a huge problem that although the willingness is there from the industry, and the technology is there, consumer demand is still lagging way behind.”
Electric and other low-emission vehicles were being promoted as a solution to environmental problems but motorists chose which cars to buy based on the quality of the vehicle, he said.
“The Government could do more to stimulate demand particularly in terms of public awareness and education around what electric cars can do for drivers. There’s too much emphasis on electric vehicles as a solution for the planet’s ills while the evidence is that they are actually decent cars as well.”
The Government could stimulate the market by encouraging public services to buy low-emission vehicles, he said.
Motor industry executives told the committee that the Chancellor had set back attempts to develop and sell low-emission vehicles in the March Budget.
Employees who receive company cars are charged a benefit-in-kind tax, on the basis that the vehicle is effectively part of their income. For vehicles with the highest emissions, the tax rate is 35 per cent of the value of the vehicle each year.
However, no tax is currently charged on cars with zero emissions, while those with emissions of less than 75g/km are taxed at a low rate of five per cent.
Under the changes announced by George Osborne, even cars with zero emissions will be taxed at nine per cent from 2015.
Graham Smith, managing director of Toyota Motor Europe, said: “There is an opportunity to reverse what is a fairly negative signal towards the auto sector in the UK, were those changes to be reconsidered. It is such a fledging market. The volumes and expense to the Treasury is tiny. It just seems perverse that the opportunity was taken to make a change in the outlook for benefit in kind at such an inauspicious moment in the development of the marketplace.”