James Dyson has announced that his firm will be scrapping its £2.5bn project to build electric vehicles, as it would not be commercially viable.

Despite engineers apparently developing a “fantastic electric car”, Dyson said that the company had failed to find a buyer for the project.

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First announced in 2017, the electric vehicle project was initially shrouded in secrecy, with no prototype electric vehicle built, and no factory site for building the vehicle officially decided. The company was due to begin manufacturing of the vehicle in 2020, and to start selling them from 2021. £1bn was committed to the development of the car, with another £1bn committed to the development of the battery.

Dyson controversially announced last year that production for its electric cars would be relocated to Singapore.

“This is not a product failure, or a failure of the team, for whom this news will be hard to hear and digest,” Dyson said in an email to employees. “We have tried very hard throughout the development process, we simply can no longer see a way to make it commercially viable.

“The Dyson automotive team has been ingenious in their approach while remaining faithful to our philosophies. Our battery will benefit Dyson in a profound way and take us in exciting new directions. Our investment appetite is undiminished and we will continue to deepen our roots in both the UK and Singapore.”

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Speaking about the employees due to lose their jobs, 500 of whom were in the UK, as a result of the new announcement, Dyson said: “For those who cannot, or do not wish to, find alternative roles, we will support them fairly and with the respect deserved.

“This is a challenging time for our colleagues and I appreciate your understanding and sensitivity as we consult with those who are affected.

“Dyson will continue its £2.5bn investment programme into new technology and grow the Dyson Institute of Engineering and Technology.”