The Government has pledged 19m towards the development of low-carbon vehicles in the Midlands, which is being designated a new Low Carbon Economic Area (LCEA).
Business Secretary Peter Mandelson said the money would help to secure 10,000 jobs by transforming them into the 'green car jobs of the future'.
He said: 'I want to see the Midlands help the UK to lead the global automotive industry in the transition from conventional to low-carbon vehicle technologies.
'The LCEA will send a clear signal to the global market about the Midlands' strengths in advanced automotive engineering.'
The money - 9.5 million from Advantage West Midlands and 9.5 million from European funding -
will be invested in the Low Carbon Vehicles Technology (LCVT) programme, which will champion the development of green technologies from batteries to aerodynamics.
Mick Laverty, chief executive at Advantage West Midlands, the regional development agency, said: 'Becoming a LCEA will reinforce our growing reputation as a globally competitive region, which continues to develop cutting-edge green technologies and high-technology industries upon which the future prosperity of all UK regions will depend.'