European Investment Bank Approves €866M in Loans for Cleaner Cars; Majority to Nissan and Jaguar

12 April 2009

The European Investment Bank Board of Directors last week approved loans worth a total of €866 million (US$1.14 billion) to European-based car makers to help design and build cleaner cars with lower CO₂ emissions. The loans include €400 million to Nissan’s European operations to develop and build more fuel-efficient vehicles in the United Kingdom and Spain, and €366 million to Jaguar Land Rover to help cut vehicle emissions.

Autocar reported that Jaguar will use the EIB funding to build an extended range electric vehicle based on the next-generation XJ. In May 2008, Jaguar Land Rover received funding from the UK government in support of the development of a number of clean vehicle projects through partnerships with suppliers, government agencies, and universities. These included the extended range electric vehicle; a flywheel hybrid system for premium vehicles; “Limo-Green” and other lightweighting and lower-emitting powertrain projects. (Earlier post.)

The EIB also approved a loan for a Volkswagen plant in India, which will produce small cars that meet tougher emissions requirements ahead of their introduction in major Indian cities from 2010.

The EIB has signed loans with BMW, Renault and Volvo Trucks since they were approved at the last Board meeting on 12 March.

The additional €866 million adds to the €3.6 billion (US$4.75 billion) in loans approved since last December for European car and truck makers. Further loans planned for submission to the Board in May and June would reach an even wider range of beneficiaries, including component suppliers, and bring total approved lending to the motor industry to more than €7 billion (US$9.24 billion) since last December, when the EIB launched a support package to aid Europe’s economic recovery from the current crisis.

Some 63% of the €866-million package for the motor industry will be provided under the EIB’s European Clean Transport Facility (ECTF). The Facility, part of the EIB’s wider response under the European Economic Recovery Package, targets significant cuts in vehicles’ CO₂ emissions through research, development and innovation, as well as the production of cleaner and more fuel-efficient cars and other transport. The balance, which is also aimed at safer, smaller and more fuel-efficient cars, will be provided under the EIB’s convergence objective to support Europe’s less affluent regions, and its external lending mandate for Asia and Latin America.

The European Investment Bank was created by the Treaty of Rome in 1958 as the long-term lending bank of the European Union. The task of the Bank is to contribute towards the integration, balanced development and economic and social cohesion of the EU Member States. The EIB raises substantial volumes of funds on the capital markets which it lends on favorable terms to projects furthering EU policy objectives.