The British car industry has welcomed government proposals that could allow Toyota Prius-style hybrids to continue to be sold in the UK after 2030, as part of a package of measures to ease regulations on carmakers.

The UK government published details on Christmas Eve of a consultation on which cars should be allowed on sale after 2030 – when sales of new petrol and diesel cars will be banned – as well as on how it will relax rules that force manufacturers to sell more electric cars every year.

The industry has been waiting for years for clarity on which cars will be allowed on sale after 2030. At the same time, over the past few months it has lobbied hard for changes to the zero-emission vehicle (ZEV) mandate, which forces manufacturers to sell more electric cars in the five years until then. Carmakers argued that they were being forced into unsustainable discounts to entice drivers to switch to electric.

Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders lobby group, said: “These are both critical issues for an industry that is facing significant challenges globally as it tries to decarbonise ahead of natural market demand. Aside from the billions invested in new technologies and products, it has cost manufacturers in excess of £4bn in discounting in the UK this year alone.”

The previous Conservative government flip-flopped over whether to ban sales of new internal combustion engine cars in 2030 or 2035. The Labour government reinstated the 2030 ban, but on Tuesday it confirmed that it was considering allowing most hybrids until 2035, albeit possibly with caps on overall emissions that could rule out the most polluting versions.

Hybrids combine a petrol engine with a smaller battery. However, they can broadly be split between cars such as the Toyota Prius that charge the battery only using the internal combustion engine, and plug-in hybrid electric vehicles (PHEVs) whose battery can be charged from a power socket.

The consultation asks the industry and other interested groups whether Prius-style hybrids should be allowed, alongside a possible cap on carbon emissions of 115g a kilometre, arguing that hybrids can sometimes produce less carbon than PHEVs.

The government’s analysis flagged serious concerns that carbon emissions from PHEVs may be more than three times greater than official tests suggest, because many owners fail to charge their cars at home.

On the ZEV mandate, the government did not add many details on its plans for introducing more flexibility, suggesting that carmakers will have a significant influence over the changes that are expected to be fast-tracked early in 2025.

However, the consultation did raise the possibility of allowing electric vans to count towards the ZEV mandate for cars, a change that could benefit carmakers such as the Vauxhall owner Stellantis over the next couple of years.

The government made the changes after carmakers argued that the ZEV mandate could result in UK factory closures, and Stellantis announced a plan to close a van factory at Luton. Jonathan Reynolds, the business secretary, said: “There is no route to net zero without backing British industries and workers.”