A £10 million prize will help researchers develop a new car battery which is "at the cutting edge of innovation", it is hoped.
The Government scheme has been designed to encourage UK research establishments, as well as manufacturers based in this country, to create the next generation of battery for ultra-low emission vehicles (ULEV).
Chief Secretary to the Treasury Danny Alexander announced the competition, saying he hopes it will draw on the "world-class" research and development centres in the UK.
The winning battery, to be announced in the summer, will be able to fit in ULEVs in order to make them even more efficient and user-friendly.
Transport campaigner Quentin Willson, has been involved in organising the competition. He said the scheme will create jobs as well as boost GDP. He thinks the UK should strive to be world leaders in ULEV battery technology.
Copyright Press Association 2015