The EU has launched a new multi-billion euro green car initiative as part of its European economic recovery plan to help manufacturers make cleaner cars.

Over 50.5 billion euro will be made available in grants for businesses across Europe to fund low-carbon technology development.

All proposals for grants will be put in front of an independent industry board from July.

However, while manufacturers are getting a helping hand on one side, they have been warned that stricter rules preventing them and their dealers misinforming car buyers about the environmental performance of their potential purchases are to be introduced.

The European Commission has promised to “develop rules to avoid misleading environmental claims” when selling supposedly green vehicles.

Also, EU car labeling rules will be tightened and by 2012, technical rules reducing the dangers posed by electric and hybrid vehicles in road accidents would be reviewed, as would potential risks to pedestrians and cyclists because of the quietness of electric vehicles.

EU industry commissioner Antonio Tajani said the commission had deciding greening European cars was critical for the industry’s financial health, adding:

“In 2010, the automotive industry enters into a defining phase for its future success.”

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