The Niche Vehicle Network fund will support a variety of projects to demonstrate new low carbon technologies on vehicles and to develop working prototypes.
It is promoting two competitions, supported by Innovate UK, the Office for Low Emission Vehicles (OLEV) and the Advanced Propulsion Centre.
The Niche Vehicle Network supports manufacturers of niche vehicles, such as premium brand sports cars and specialist commercial vehicles, and their suppliers.
Up to £1.3 million is available for early market low carbon technology demonstration projects and a further £1 million to take existing projects from demonstration to production readiness.
Technology areas funded could include lightweight vehicle and powertrain structures; electric machines and power electronics; energy storage and energy management; disruptive low emission vehicle technologies, and digital innovation in low-volume manufacturing.
Simon Edmonds, director of manufacturing and materials at Innovate UK, said: “We have been supporting the Niche Vehicle Networks’ R&D programme since 2012 and are delighted to be continuing that support this year.
“The competition is part of our wider programme of activity for low carbon vehicles technologies funded by Innovate UK and our partners at OLEV and the Advanced Propulsion Centre.
“I’d urge interested SMEs to take advantage of this latest round and look forward to seeing the competition winners at LCV2016.”
Find out more about how Innovate UK is supporting the UK automotive sector