The government come up with £16.5m funding for research and development that will lead to significant reductions in CO2 emissions from road transport.
Business secretary Vince Cable announced the plan during a visit to the MIRA Technology Park in Nuneaton, Warwickshire.
The Technology Challenges in Low Carbon Vehicles competition for collaborative R&D funding has been developed in conjunction with the UK Automotive Council.
Grants will be awarded to UK businesses through an open competition for collaborative research and development funding, opening early next year, which will be managed by the Technology Strategy Board in partnership with the Office for Low Emission Vehicles and the Engineering and Physical Sciences Research Council.
They are looking for “highly innovative, industry-led projects involving low carbon vehicles that aim to achieve significant cuts in CO2 from road transport”.
“Supporting the development of new technologies is vital to ensure this country remains such an attractive location for investment by global vehicle manufacturers and suppliers,” said Cable.
The competition opens on 18th February 2013 and expressions of interest must be submitted by 27th March 2013.