The future of the £5000 plug-in car grant has been secured, with £200m of funding being set aside for the incentive between 2015 and 2020.
The £200m comes out of a £500m package that is intended to encourage a greater uptake of electric cars and other ultra-low-emission vehicles.
The funding, which kicks in from 2015 and is set to last until 2020, will also go towards improving the charging network and research and development.
Deputy prime minister Nick Clegg said that £100m will go towards research and development of low-emission technology and vehicles, while £32m will go towards the charging network. The aim is to install rapid charging points on the motorway and A-road network by 2020. These rapid charging points would charge a car in as little as 20 minutes.
There will also be £20m set aside for the taxi infrastructure, while the bus network will get £30m. Local areas will also be able to submit their plans to get a share of a £35m pot. The winning cities could use the money towards allowing free parking for electric cars or by letting them use bus lanes.
'This major investment is there to make driving an electric car affordable, convenient and free from anxiety about the battery running out,' said deputy prime minister Nick Clegg. 'It’s also about creating a culture change in our towns and cities so that driving a greener vehicle is a no-brainer for most drivers.'