The research published by the Tony Blair Institute for Global Change yesterday states that the government needs to act with ‘real urgency’ to create an alternative to fuel duty revenues which will dry up as motorists shift to electric cars.

The report estimates that the number of electric cars will rise from around 100,000 now to 3m by 2025, 10m by 2030 and 25m by 2035.

The Treasury collects just over £40bn in vehicle taxes, with £28bn from fuel duty, £6bn on VAT from fuel and another £6.5bn from vehicle excise duty (VED).

The report states that as battery electric vehicles (BEVs) pay no fuel duty or vehicle excise duty they warn that income will plummet from 2030 when the government bans the sale of new petrol or diesel cars.