Europe's car makers will receive 5 billion (about 4.1 billion) for investment in the development of environmentally friendly vehicles if a package proposed by the European Union is approved.
The funds would be part of a proposed 200 billion package designed to stimulate member states' economies.
In a further effort to stimulate car demand across the EU, the European Commission has recommended that member states offer tax incentives encouraging consumers to trade in older high-polluting vehicles for new models.
The proposal envisages that about 170 billion would be contributed by the EUs 27 member states through tax and infrastructure plans. The rest would be provided by the commission.
The package will be reviewed by EU finance ministers next week and by Government leaders in December.