The cars are fast, too, with maximum speeds of about 150 mph. Noted auto makers McLaren, Williams and Renault have designed and built Formula E cars.
The first race will take place in Bejing in September, followed by races in a total of 10 cities around the world, including Los Angeles, Rio de Janeiro and London.
Formula E is in talks to bring a race to New York, too, Agag told "Squawk on the Street." The Federation International de I'Automobile, the governing body of motor sports worldwide, backs the series.
Already, the racing championship has some prominent backers, including business magnate Richard Branson and veteran auto racer Mario Andretti. Actor Leonardo DiCaprio has sponsored the Venturi team.
"He's passionate about electric cars and about the environment, and this championship, Formula E, intends to change for good the environment in our cities," Agag said of DiCaprio's involvement. "With more electric cars, we will have cleaner air, less pollution. That's something that appealed to Leonardo DiCaprio and to other partners."
A self-described "petrol head," Agag said Formula E is not competing against gas-fueled car races. Rather, he wants the electric championship series to get people talking about electric cars and advance the technology.
Formula E is attracting some of the biggest drivers in auto racing, too, Agag said. Drivers are coming to Formula E from IndyCar or Formula 1 because it provides an opportunity to race around the world in cars with the latest technologies, he said.
Oh, and the $5 million purse isn't bad either.
CNBC's David Montalvo contributed to this report.