Is this farewell to the traditional black cab?

Traditional black cabs could be driven off London's streets by tough new European pollution rules, it was claimed today.

The manufacturer of the taxi warned ministers it could be killed off in three years. In a memo to the Commons trade and industry committee, London Taxis International said its cabs would have to pass strict "Euro5" limits on emissions from 2010.

It said it had begun developing a hybrid engine that would meet the rules, but without government backing the vehicle would not be completed.

In a second threat, the EU is to end a measure that allows cabs to sidestep emissions limits because they are "heavy" vehicles. London Taxis Internationalcalled on ministers to set up a £5 million research and development fund to produce a low-emission engine that would pass the stringent new tests, and help create a "green" taxi fleet for the Olympics in 2012.

The company employs more than 450 people at its Coventry plant and at sales outposts including London. Its taxis cost from £27,000 to £35,500. The latest model, the TX4, was launched this year.

Sales and marketing director Matthew Cheney said: "We do not want to be alarmist in talking about the death of the London taxi, but it is becoming more and more difficult. Jaguar has gone from Coventry, Peugeot has shut down. The Midlands automotive industry is now just LTI. Measures such as the derogation [on heavy vehicles] help us stay alive but if they are taken away you could see us go as well."

He said LTI had spent millions of pounds developing wheelchair-accessible taxis and engines that meet current European rules, and it was now " impossible" for a small manufacturer to fund a new Euro5 engine.

"Five years is the minimum to develop a new engine," he said. "We do not have the vast resources of someone like Ford to develop our own.

"If we did it would force up the cost of our taxi enormously because we sell on average 2,600 cabs a year, and we cannot afford to buy in a new engine from another maker."

LTI's memo says: "Without LTI vehicles ... Britain will lose its purpose-built taxi market." It adds that the engine could add £12,000 to the cost of a cab.

The Euro 5 standard will force diesel engines to cut emissions of two key pollutants: nitrogen oxide and particulates. Particulates will have to come down by 80 per cent and nitrogen oxide from 250mg/km to 180mg/km.

All new cars will have to have particulate filters. After 2010 cities that do not enforce the new EU rules can be taken to court and fined.

* A 3.1 per cent rise in London taxi fares is to come into force from Saturday.