Launched by chef secretary of the Treasury, Danny Alexander, during a trip to the McLaren factory, the competition is open to all businesses, universities and engineering experts, and is backed by the Office for Low Emission Vehicles (OLEV) and Technology Strategy Board.

To qualify, the vehicles must be able to travel as far as a petrol or diesel car, but without using any fossil fuels, and offer a price parity with conventional models.

It follows an announcement early in July that the government will be launching a £1bn Advanced Propulsion Centre, part-funded by industry, to support the development of new supply chains for low-carbon vehicles.

 ‘We want more companies to invest in this cutting-edge research so that Britain is the global leader in ultra low emission vehicles,’ said Alexander.

‘That is why we have announced a £10 million prize for innovations which will enable the next generation of low emissions vehicles to run as long as and as far as conventionally fuelled cars.’