The European Commission is backing a €26 million (£23m) loan to a Spanish company to develop innovative products for hydrid and electric vehicles.

The European Investment Bank (EIB) is providing the loan to Cikautxo, which specialises in rubber and plastic components for the automotive sector.

The new financing will help the company develop lighter car parts for low emission vehicles and boost its research and development activities in fuel efficiency.

The funding, provided under the European Fund for Strategic Investment (EFSI), will also help the firm increase its production capacity in the province of Biscay as well as its Czech, Romanian and Slovak sites.

In addition, Cikautxo intens to implement new production processes to drive manufacturing using recyclable alternatives to rubber.

Jyrki Katainen, Vice President responsible for Jobs, Growth, Investment and Competitiveness said: “Electric cars are crucial for the transition towards a more sustainable Europe. This €26 million EFSI-backed loan to Cikautxo to develop innovative products for electric and hybrid cars is helping to put the EU at the forefront of clean transport.”