If someone were to drive an older, polluting taxi in London, they could face a £15 Ulez charge every day, in addition to the £15 Congestion Charge cost.
Steve McNamara, general secretary of the Licensed Taxi Drivers’ Association (LTDA), urged the Government to extend the grant, calling the scheme “essential”.
He suggested that removing the grants would bring the cost of a plug-in hybrid electric LEVC TX taxi bought on finance to as much as £110,000.
The general secretary added: “This would be absolutely disastrous because taxi drivers thinking of buying a new vehicle will try to hang on to old vehicles. It’s bad for us, it’s bad for London and it’s got to be bad for the Government.
“They tell us we’re the best cab service in the world, they give us lots of platitudes about how wonderful it is that we buy these vehicles.
“But are they prepared to put a little bit of money in to keep us doing it? By Government standards it is a tiny fraction of a drop in the ocean,” he told the PA news agency.
There are hopes that Chancellor Jeremy Hunt will outline future measures for the plug-in vehicle grants when he delivers the Spring Statement on March 6.
Data from Transport for London shows that 56 per cent of the 14,750 taxis licensed in the capital are deemed to be capable of travelling minimum distances powered solely by electric batteries.
LEVC taxis are built in Warwickshire by the London Electric Vehicle Company, which is owned by Chinese manufacturing giant Geely.
Steve McNamara said it was a “win-win-win” for everyone if the grant is extended, although warned that the future of electric taxi manufacturing in the UK could be at risk.
Electric taxis in London will avoid a number of extra charges
He added: “Are the Chinese going to keep pumping money into it or are they going to pull the factory? Are they going to shift production to China?
“They’re obviously going to be looking at all of those things. That decision process is not going to be helped if the Government withdraws the Plug-in Taxi Grant.”
A spokesperson for the Department for Transport said: "We’re committed to supporting the switch to electric, and through this grant, we have provided over £50million to support the purchase of 7,000 zero emission-capable taxis to date.
“The grant is committed until the end of this financial year, and as always it remains under continual review.”