The government has announced it will give £23 million of funding to 16 low-carbon-vehicle projects.
The investment is being made to get low-carbon vehicles on sale sooner, as well as ensuring the UK is at the forefront of low-carbon technology.
Businesses receiving grants include Ford, Jaguar, Land Rover, Lotus and Mercedes, as well as small- and medium-sized companies and university projects.
The money is being provided by the Technology Strategy Board and the Department for Transport through the Low Carbon Vehicles Innovation Platform, which was set up last September.
Science and Innovation Minister Ian Pearson said: 'These investments will provide a great opportunity for British companies to mobilise innovation to respond to global climate change challenges and to meet demanding new CO2 standards for new vehicles.
'They will also help position British companies to benefit from the growing domestic and international demand for lower carbon vehicles.'
The businesses receiving the grants have pledged to spend an additional £29 million of their own money on the projects.