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.