Britain’s car industry has warned that the government’s proposed ban on sales of new petrol and diesel cars by 2040 risks damaging the industry and stalling sales of new cars.

Mike Hawes, chief of executive of the Society of Motor Manufacturers and Traders trade body, said that carmakers were working with ministers on the switch to electric cars but called for the government to use carrots rather than sticks.

“Outright bans risk undermining the current market for new cars and our sector, which supports over 800,000 jobs across the UK, so the industry instead wants a positive approach, which gives consumers incentives to purchase these cars.

“We could undermine the UK’s successful automotive sector if we don’t allow enough time for the industry to adjust,” he said.

However, experts said two decades was plenty of time for carmakers to evolve away from the internal combustion engine.

Prof David Bailey, an automotive industry expert at Aston University, said: “I think that’s more than enough time. It’s sufficiently long to be taken seriously and give the industry time to adjust.”

He said that by 2040 carmakers would have switched over to battery-powered vehicles regardless of the government’s announcement. But in the short term, he said ministers needed to do more to ease that switch.

“I think where they [carmakers] probably have a point is the government isn’t doing enough to incentivise people to switch over to electric cars and hybrids in the short term,” said Bailey.

Motorists are offered a £4,500 government grant off the price of fully electric cars (down from £5,000 when the scheme launched in 2011) and £2,500 for plug-in hybrids, which can run a short distance on a battery before switching to a conventional engine.

Bailey said the scheme should stay until the 2020s. Research by Bloomberg New Energy Finance suggests that will be the decade when there is a tipping point as the total cost of owning an electric car – including refuelling and maintenance, as well as buying the vehicle – becomes cheaper than combustion engine vehicles without subsidies.

BMW, which on Tuesday announced it would make its fully electric mini in Oxford, said it was on track to sell 100,000 fully and partially electric vehicles around the world this year, up from 62,000 in 2016. “We see electric powertrains as the future for our industry,” a spokesman said. Nissan said it welcomed the move by ministers.

However, one luxury carmaker branded the government’s plans “absurd” because some drivers need to travel long distances. The average range of a new electric car is 100-150 miles, although some of Tesla’s cars can now run for more than 300 miles between charges.

Andy Palmer, chief executive of Aston Martin, told the Financial Times: “If the government is going to legislate then they have to assist as well, otherwise they will destroy part of the industry.”

Andy Barratt, managing director of Ford of Britain, told the Guardian: “Our product plans very much support that kind of timeline. A 23-year period is a good notice period.”

But he said despite the UK and France announcing a phase-out of new petrol and diesels by 2040, there was “not a global movement at this point in time” to ban them.

The British car industry said it could only hit the 2040 deadline if consumers wanted electric cars. “[Demand is] still at a very low level as consumers have concerns over affordability, range and charging points,” said Hawes.

According to a survey of 2,134 drivers, only 2% of people are thinking of buying a pure electric model as their next car. The main reason given for not considering one was cost, followed by concerns over range and the time needed for recharging.

The survey, for insurance firm Aviva, also showed that, after VW’s emission scandal and amid concerns over pollution, drivers are turning away from diesel: 68% said their next car would be petrol, with only 21% choosing diesel. New car sales are currently split roughly half and half between petrol and diesel.

This year so far, fully electric cars accounted for 0.5% of all new registrations, plug-in hybrids accounted for 1% and hybrids, such as the Toyota Prius, 2.6%.

While only 37,000 of the 26m cars on British roads now are pure electric, they are growing at an astonishing rate: SMMT figures for last month show they were up 46% on June 2016.

Some carmakers will do better than others out of the transition the government wants. Bailey said that Renault-Nissan, BMW and Volvo, which recently said it would only launch electrified new cars from 2019 onwards, had already gone a “long way” towards a battery-powered future. Ford, by comparison, had been “very slow”, he said.

Ultimately, it was too early to say who would win out, he said. “Who survives and who prospers? We just don’t know at this point.”

Ben Lane, director of the site Next Green Car, said VW was also emerging as a leader on electric cars as a result of the emissions scandal over its diesel models. “At the bottom of the list is Ford. They do have conventional hybrids in US, they do have the Focus electric, but they’ve not pushed it,” he said.

Ford was overtaken in terms of stock-market value by Tesla in April this year and the following month parted company with its chief executive, Mark Fields. The head of its driverless car unit, Jim Hackett, was handed the top job.

The switch to electric cars will require a significant investment by carmakers, experts said, as the companies re-skill their workforces, invest in research and development and retool their manufacturing facilities.

“The big question: do we see this as a huge opportunity to develop new supply chains, new skills, new technologies? If we don’t develop these, they will happen somewhere else,” said Bailey, who claimed the government was not yet doing enough to support the industry’s transition.

Prof Andrew Parkes of Coventry University said the signal the government had sent “creates a huge opportunity for the UK to lead in the design and development of a new generation of zero-emission and autonomous vehicles”.

Chris Gubbey, chief executive of the London Electric Vehicle Company, which is making the new, electrified black cab at a £325m factory in Coventry, said Britain already had an “exciting, dynamic” electric car sector – and so would benefit from the switchover.