London Taxi Co. says it will invest an additional 25 million pounds (29 million euros) in its new assembly plant near Coventry, England, to produce electric-powered vans.
The company, which is owned by China's Geely Automobile Holdings, will promote its electric vans as a clean alternative to diesel-powered commercial vehicles -- some of the worst polluters in the UK.
The new 300 million pound assembly plant opened last week.
The extra cash will allow London Taxi to make electric commercial vans as well as a battery-powered version of London's black cab, which will go on sale later this year.
The UK has one of Europe's largest diesel fleets after its drivers were encouraged to switch from gasoline because diesels have more range and emit less carbon dioxide.
But following Volkswagen Group's scandal over diesel-emissions cheating as well as rising sentiment against the powertrain in Europe, awareness about the health impact of diesel engines has been rising. Diesel cars emit more nitrogen oxides (NOx) than gasoline-powered vehicles, which the European Environment Agency blames for increased respiratory conditions and cardiovascular disease.
Taxis and vans are being targeted in London Mayor Sadiq Khan's campaign to get rid of the dirtiest diesel-fueled vehicles. From January 2018, all new taxis will need to be zero-emissions capable. Without switching to electric motors, London's 23,000 diesel-powered taxis would emit about a fifth of central London's nitrogen oxide emissions in 2020, according to the mayor's office.
Congestion from delivery vehicles rose 3.4 percent from 2008 to 2014, driving pollution levels past European Union limits. London expects van traffic to rise another fifth in the next 15 years because of online shopping deliveries.
"This is going to be the future-proofed 'white van' that people have been waiting for," said Chris Gubbey, CEO of London Taxi, in a statement.
The factory at the Ansty Technology Park can currently produce up to 20,000 vehicles a year.
The new taxi will go on sale in London in the fourth quarter and globally in early 2018. Last year, Geely drummed up interest in other smog-bound European capitals such as Paris and Berlin.
"The opening of our new plant sets a number of records," said Carl-Peter Forster, chairman of London Taxi. "It's the first brand-new automotive manufacturing facility in Britain for over a decade, the first dedicated electric vehicle factory in the UK, and the first major Chinese investment in UK automotive."
While a final price for the taxi hasn't been set yet, Geely says it will be "highly competitive," with lower fuel costs than vehicles that run on gasoline or diesel. London's transport authority and the UK government have said they will provide drivers with grants of as much as 7,500 pounds for switching to a low-emissions taxi.