The Eco-Expressway is planned to be a 6 mile (10km) adaptation of an existing route into Nottingham.
As well the lane in each direction reserved for electric vehicles, the Â£6.1m project will also have a cycleway and lane for conventional traffic.
In January Nottingham was one of four successful bids to share Â£40m of government funding to promote use of electric vehicles.
The city council says this will promote sustainable transport but some campaigners say close monitoring will be needed.
The other successful cities - London, Milton Keynes and Bristol - are all looking to encourage electric cars by providing more charging points, free parking and preferential road schemes.
In Nottingham, a number of electric buses have been ordered to provide services on the Expressway between Gedling, through Colwick and to the eastern side of the city centre.
Nick McDonald, Portfolio Holder for Growth and Transport at the city council, said: "It will provide quicker and cleaner travel and help to improve the city's air quality."
But Bettina Lange, from the Nottinghamshire Campaign for Better Transport, said: "Opening the bus lane to taxis and private electric cars needs monitoring closely.
"If the take-up of electric cars speeds up, and especially if taxi fleets get on to this, it will defeat the purpose because the bus lane will just fill up with other vehicles."
The project is planned to be completed by late 2017.
Work on the first electric vehicle-only road lane in England has begun.