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Several people were injured after the car hit a group of activists who had gathered in the city to stage a counter-protest to a march by white nationalists.
Video footage, posted to Periscope, showed the vehicle ploughing through the crowd, who were marching peacefully, and tossing one activist onto the car in front.
The disturbing videos show people screaming and running in terror before the car reverses at speed and drives away.
At least one person was witnessed lying on the ground receiving medical treatment, while several others were loaded into ambulances on stretchers.
Charlottesville Mayor Mike Singer said on Twitter: “I am heartbroken that a life has been lost here.”
Earlier on Saturday, violent clashes had erupted between the counter-protesters and far-right groups.
Up to 6,000 people were expected to join the “Unite the Right” rally against plans to remove a statue of a pro-slavery US Civil War general.
The governor of Virginia Terry McAuliffe said on Twitter that a state of emergency had been declared in order “to aid state response to violence” at the rally in the city, about 100 miles outside Washington, DC.
The white nationalists are protesting in Charlottesville after it voted earlier this year to remove a statue of Confederate General Robert E Lee from a city centre park.
He commanded the Confederate forces in the US Civil War of 1861-65.
Supporters of the rally were involved in fighting with counter-demonstrators, with water bottles hurled from both sides and chemical sprays being used.
Men dressed in military-style uniforms were also seen carrying rifles and shields in the area.
Officers fired tear gas and pepper spray against activists and said that arrests have been made and at least two people were injured in the clashes.
The clashes came after right-wing blogger Jason Kessler planned what he called a “pro-white” rally in protest over Charlottesville’s decision to remove the statue.
There were also fights on Friday night, when hundreds of white nationalists marched through the University of Virginia campus carrying torches.
City officials declared a local emergency shortly after 11am [4pm BST].
The state of emergency allows local authorities to request additional resources if needed, the police department said.
The clashes mark the latest confrontation in Charlottesville since the city voted earlier this year to remove the statue of Lee from a park.
In May, a torch-wielding group that included prominent white nationalist Richard Spencer gathered around the statue for a night-time protest, and in July, about 50 members of a North Carolina-based KKK group travelled there for a rally, where they were met by hundreds of counter-protesters.
Mr Kessler said this week that the rally is partly about the removal of Confederate symbols, but also about free speech and “advocating for white people”.
He said in an interview: “This is about an anti-white climate within the Western world and the need for white people to have advocacy like other groups do.”
Among those expected to attend the rally are Confederate heritage groups, KKK members, militia groups and “alt-right” activists, who generally espouse a mix of racism, white nationalism and populism.
Officials have been preparing for the rally for months.
Charlottesville mayor Michael Signer said he was disappointed that the white nationalists had come to his town and blamed President Donald Trump for inflaming racial prejudices with his campaign last year.
He said: “I’m not going to make any bones about it. I place the blame for a lot of what you’re seeing in America today right at the doorstep of the White House and the people around the president.”
US president Donald Trump tweeted: “We ALL must be united & condemn all that hate stands for. There is no place for this kind of violence in America. Lets come together as one!
“Am in Bedminster for meetings & press conference on V.A. & all that we have done, and are doing, to make it better-but Charlottesville sad!”
The White House was silent for hours about the clashes, except for a solitary tweet from US first lady Melania Trump.
Mrs Trump wrote: “Our country encourages freedom of speech, but let’s communicate w/o hate in our hearts. No good comes from violence.”
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