Boris Johnson is considering launching plans to give drivers up to £6,000 to exchange their petrol or diesel car for an electric model, the Telegraph has reported.
The newspaper reported that the Prime Minister may use a speech on the economy on July 6 to set out his plans for a scrappage scheme.
The move is believed to be designed to help manufacturers hit hard by the coronavirus crisis, with sales of new cars down nearly 90% in May compared with the same month in 2019.
AA president Edmund King called on drivers to "take up the deal" if it goes ahead, as it would "help both car manufacturers and air quality".
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Here's everything you need to know:
How will it work?
At the time of writing, the scheme hasn't been officially announced, and details on any plans are scarce; Johnson is understood to have pencilled in Monday 6 July for a speech to make an announcement.
But the scheme could see drivers given up to £6,000 to exchange their petrol or diesel car for an electric model.
A previous initiative launched in 2009 saw motorists get £2,000 for trading in old cars for new models.
Half the money came from the Government, with the other half from manufacturers.
Rosie Rogers, of Greenpeace UK, said: "The Government would be moving in the right direction by favouring electric vehicles over polluting diesel and petrol. But they need to go further to really see clean transport drive the green recovery.
"Any scrappage scheme should also give people the option to use public transport instead of a new vehicle, or to purchase the likes of e-bikes as an alternative to their car."
What would the scheme achieve?
Any new scrappage scheme would be designed to point new car buyers in the direction of electric vehicles, as the Goverment continues to seek new eco-friendly policies.
Figures published by the Society of Motor Manufacturers and Traders show that pure battery-electric new cars held just a 1.6% share of the new car market last year.
Transport Secretary Grant Shapps has said the ban on sales of new petrol, diesel and hybrid cars and vans could be brought forward from 2040 to as early as 2032 in a bid to meet carbon reduction targets.
RAC head of roads policy Nicholas Lyes predicted that a scrappage scheme "might be the game-changing boost the automotive sector needs".
He went on: "Drivers' concerns about emissions are becoming ever stronger and interest in zero-emission vehicles is increasing.
"But many continue to say that the upfront cost of electric vehicles compared to those of similarly sized conventional vehicles is a barrier to them switching so any sort of scheme which tackles this would be very welcome."