The European Investment Bank (EIB) will provide up to €300 million ($427 million) to French automotive company Valeo for research projects that aim to reduce the fuel consumption and carbon dioxide emissions of Europe’s cars, the loan’s recipient announced yesterday [July 22].

The EIB loan will also be used for research in vehicle “active safety” technologies, aside from contributing to the “green cars” drive of the European Union (EU), Valeo said.

Valeo, a company exclusively on the business of designing and producing advanced components and systems for cars and trucks, said the EIB loan will come with competitive terms in two installments, the first of which, €225 million, will be drawn by the end of July, 2009.

Valeo itself said it will invest €645 million ($918 million) over four years for the research efforts.

"This funding is very important, particularly during the current crisis, and will allow Valeo to continue and accelerate existing research projects aimed at improving fuel efficiency and active safety for vehicles, two areas where market demand is very strong and which show strong growth potential for Valeo," Valeo CEO Jacques Aschenbroich said.

The research projects will cover fuel efficiency technologies, including mild and micro hybrid solutions. To come up with safer cars to drive, active safety technologies such as assisted viewing systems, crash avoidance systems, and advanced lighting systems will also get research funding.

EIB Vice President Philippe de Fontaine Vive said the investment will contribute to economic recovery, as the bank continues to help Europe cut through the global economic crisis.

The EIB is a long-term EU lending arm that aims for the economic development of EU member states.

In December, 2008, the EIB said it will increase in 2009 and 2010 by 30%, with spending to be specially focused on energy and climate change, including clean transportation.

So far this year, the bank has approved some €5 billion ($7 billion) for cleaner vehicles alone, €3.4 billion of which are under its European Clean Transport Facility.

Meanwhile, another financial product called the Risk Sharing Finance Facility (RSFF) focuses mainly on solar and other forms of renewable energy, automotive research, and biotechnology.


- Eric Dorente