Labour's new Electric Car Grant could lead to serious issues with the UK's zero emission vehicle market, according to an expert.
Transport Secretary Heidi Alexander and Roads Minister Lilian Greenwood unveiled the new Electric Car Grant earlier this month to help more drivers ditch petrol and diesel cars.
The £650million scheme will allow manufacturers to cut electric vehicle costs by up to £3,750 if it costs less than £37,000.
The move has generally been met with positivity, as industry experts and manufacturers say it acts as a major incentive to help motorists invest in electric.
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|The Electric Car Grant was launched earlier this month to help motorists switch to EVs
However, Staurt Masson, editorial director of The Car Expert, described the grant scheme as being a "textbook example of how not to run industrial policy".
The expert cited critical issues around the rollout of the grant, which has yet to be formalised and did not include consultation with the sector.
The Department for Transport is expected to unveil details of the grant scheme in the coming weeks, including which manufacturers and vehicles are eligible.
Lilian Greenwood, Future of Roads Minister, appeared to confirm that Chinese brands would not be eligible to apply for the grant scheme.
The Labour MP for Nottingham South cited concerns around the environmental fears around electric cars made in China, claiming that a large amount of coal is used in the process of making the vehicles.
Masson said: "Right now, no one seems to know which cars will qualify, or what the actual grant values will be.
"The result? Consumer confidence has collapsed overnight. Manufacturers say EV sales have ground to a halt, with customers cancelling orders left and right in anticipation of price drops that might come with a £3,750 grant - if they're lucky."
A handful of brands have launched their own versions of the Electric Car Grant, including Chinese manufacturers Leapmotor, MG and GMW, while Alfa Romeo has also cut its prices.
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Despite this, many manufacturers have yet to make any moves regarding their prices or their intention to launch their own EV grants.
Masson warned that the industry could see "three months of paralysis" after a popular car brand said it would be a "miracle" if the sector receives clarity within 90 days.
Sources have suggested that the Department for Transport will unveil further details about the Electric Car Grant in the coming weeks.
Data from the Society of Motor Manufacturers and Traders (SMMT) shows that one in four buyers chose an electric vehicle in June.
LEAPMOTOR | The Leapmotor T03 and Leapmotor C10 will be part of the brand's grant scheme In total, 47,354 new electric vehicles were registered, marking an impressive year-on-year jump of 39.1 per cent, while the market share of new petrol and diesel vehicles continues to fall.
Masson said: "This lack of clarity is not just damaging confidence - it's distorting the market. What's worse is that the fallout is entirely avoidable.
"With July sales already dented, and August traditionally quiet, the Government is in danger of sabotaging the crucial September sales month unless it gets its act together, fast.
"If the UK is serious about leading the EV transition, this isn't the way to do it. The Government must urgently provide clear, detailed guidance - or risk losing both credibility and momentum in the shift to electrification."