Science and Innovation Minister Ian Pearson said the aim of the additional funds was to usher through new vehicle technologies at a faster pace.

“Through our investment in UK-based research and development we want to accelerate the introduction of low carbon vehicles, ahead of what would be achieved by market forces alone,” said Pearson.

“This funding will help companies in the UK to benefit from the growing domestic and international demand for lower carbon vehicles.”

Carbon emissions from road transport account for around 20 per cent of domestic emissions in the UK and the challenge for the automotive industry is to meet new EU carbon emission standards for new cars.

The funding will be available through a competition managed by the Technology Strategy Board and will be available to vehicle technologies with the clear potential to be commercially viable within five to seven years.