“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.”