The manufacturer of the iconic London black cab has signed a deal to design and build a battery-powered taxi with no carbon emissions.
Manganese Bronze says the car will have a top speed of 50 miles per hour and a range of 100km on each battery charge, costing about 4p per mile to run.
It will work with electric vehicles specialist Tanfield Group, with the car built in the UK and launched in 2009.
The joint venture follows interest from several cities keen to cut emissions.
But the higher cost of buying the taxi means it is only likely to take a small part of the market, Manganese says.
Manganese's most recent model, the TX4, costs between £28,000 and £33,000.
The cost of the batteries means the zero-emission version will cost more than this, though no price tag has yet been put on it.
Savings over the lifetime of the vehicle would be "significant" said Mark Fryer, Manganese's group finance and business development director.
But he conceded that the higher sale price made putting the commercial case for the new vehicles "more difficult".
"I do not think we will see a significant substitute impact unless there is change in regulations," he said.
"This will be something for a small group of drivers."
Mr Fryer added that Manganese had been approached by several cities - including some in Scandinavia - that were interested in using the existing diesel-powered black cabs, but felt that the emission levels were too high.
Later this year Manganese Bronze will begin manufacturing the black cab in Shanghai in a deal with Chinese carmaker Zhejiang Geely.
Hong Kong already has London taxis which were made elsewhere and shipped to the territory.
Last week, Manganese Bronze warned that sales so far this year had been affected by the uncertainty which has swept through London's financial market.