The UK car industry, which employs nearly 800,000 people, is under threat from the Government’s insistence that motorists must switch to electric vehicles, industry leaders have warned. Carmakers contribute £25 billion each year to the economy and can help the Government meet its goal of growing the economy, says a major new report from the Society of Motor Manufacturers and Traders (SMMT). But it is struggling to sell electric vehicles to customers who simply don’t want to buy them.

The trade group, which represents firms employing tens of thousands in Britain such as Nissan, Jaguar Land Rover and Mini, called for reductions in VAT on electric cars and a rapid increase in the number of charging points available for motorists to power up the vehicles. It also suggested the Government could rethink plans to end the sale new pure petrol or diesel cars entirely in 2030, and the sale of new pure petrol-diesel vans in 2035.

In a major report today the SMMT said: “Globally, other markets, including the EU and USA, are revisiting the viability of the timelines previously envisioned in the face of multiple headwinds, and placing increased focus on support for domestic and international competitiveness and manufacturing.”

While the full ban on new petrol cars has not yet come into force, manufacturers are already obliged to ensure a proportion of the cars they sell are electric. But they have been forced to offer discounts totalling £6.5 billion to encourage motorists to buy the vehicles.

An SMMT survey found more than three quarters of industry leaders believe the UK is not on course to meet the 2030 target.

And the report warned the UK’s targets were tougher than in many other countries. It said: “The UK has set some of the world’s most ambitious

decarbonisation targets to meet its net zero commitments, placing the greatest burden and expectations on the automotive sector. However, organic market demand has not kept pace with this ambition.”

The ban was originally proposed by the last Conservative government and is also Labour policy.

The report also says manufacturers are struggling with high electricity costs and concerns about a shortage of skilled staff, but welcomes the Government’s trade deal with the US and an industrial strategy published this week.

Mike Hawes, SMMT Chief Executive, said: “We welcome the Government’s Industrial Strategy, a 10-year plan which answers our call for a long-term commitment to automotive manufacturing.

“With action to reduce electricity costs, upskill workers and unlock finance, it lays the foundation on which we can build our future. We now need to see the Strategy implemented and at pace, because competitors will move fast so our window of opportunity will not remain open for long. The prize, however, in terms of jobs, innovation and economic growth – green growth at that – is worth the investment.”