The government has been heavily criticised after announcing it is slashing the grants supporting purchase of electric vehicles, and scrapping grants for hybrids.

Changes to the Plug-in Car Grant (PICG) mean that the grant rate for Category 1 (pure electric) vehicles will be cut from £4,500 to £3,500 and Category 2 and 3 (hybrid) vehicles will no longer be eligible for the grant.

The new grant rates will come into effect on Friday 9 November, and the government said that if sales are higher than expected, it may reduce grant rates earlier than this date.

The PICG was introduced in 2011 and has supported the purchase of more than 160,000 new cars.

Sue Robinson, director of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle retailers in the UK, said: “It is extremely disappointing to see that the government has decided to remove the grants for plug-in hybrids and cut those for electric cars, which, in the short term, can undermine the progress made so far in the development of the low emission vehicles sector.”

She added: “To meet the emissions targets and ensure a solid growth of the electric vehicle market, it is crucial that the government works with the industry to ensure that consumers feel confident enough to switch to a low emission car.

“Retailers are working hard to clarify a number of issues affecting our sector, especially regarding emissions and fuel types. Consumers need to be supported and this announcement is likely to create further confusion. We call on the government to continue to listen to retailers’ concerns and work alongside the industry.”

RAC head of roads policy Nicholas Lyes said: “The reduction of the plug-in car grant is a major blow to anyone hoping to go green with their next vehicle choice and makes little sense when we need to focus our efforts on lowering emissions from vehicles.

“Of particular concern, some popular zero emission capable plug-in hybrid models will lose their plug-in car grant altogether.

“With up-front costs still a huge barrier for those hoping to switch to an electric vehicle, this move from the Government is a big step backwards and is in stark contrast to countries like Norway where generous tax incentives have meant that it has one of the highest ownership levels of ultra-low emission vehicles of anywhere in the world.”