A €600 million (£509m) loan agreement between an EU bank and a Volvo Group subsidiary to making its engines more fuel efficient has been completed.

The financing will be used by Volvo Treasury AB Sweden for research, development and innovation (RDI) investments in fuel efficiency and safety related to trucks, buses and construction equipment.

It will also finance selected RDI investments towards reducing pollutant emissions and focus on the development of electrified powertrains and new ways of providing efficient transport.

According to the European Investment Bank (EIB), fuel costs account for about a third of the operational costs of truck operators.

Christer Johansson, SVP Investor relations at Volvo Group said: “The loan from EIB will further strengthen our ability to invest in strategic areas to create more sustainable transports.”