General Motors Corp. is teaming up with a leading engineering university to establish a new engine-research center in Turin that will study ways to reduce the impact of automobiles on the environment.

The facility at the Polytechnic of Turin, which is home to some 26,000 students, will cost an estimated €100 million ($125 million). Up to €50 million ($62.5 million) will be funded by a European Investment Bank loan.

GM’s involvement in the project stems partly from its strong presence in the region. General Motors Europe already has a powertrain research center in Turin, which leads GM's diesel, manufacturing and engineering activities and employs more than 150 engineers. The auto maker also has a research and design center in Russelsheim, Germany.

The new Turin center, which is expected to be fully operational in second-half 2008, will become the home of GM Powertrain Europe's diesel powertrain research and house up to 300 employees.

GM's decision to build a new development center follows its split from former alliance partner Fiat Auto SpA. The two auto makers dissolved their GM-Fiat Powertrain joint venture in 2005.

“We’ve always had a lot of good cooperation with the Polytechnic of Turin,” says a GM Europe spokesman of the decision to locate the center in Italy.

"This is a very professional university, and we have taken a lot of engineers from the technical departments over the years," he says. "From our perspective, they have the highest quality of trained engineers in Italy. It makes good sense for us to expand there.

"It’s a win-win opportunity," he adds. "The Polytechnic gets to put engineers to good employment and we can develop closer links with them and new synergies."

The center will be focused on engine technology, particularly diesel engines.

“We will look at diesel reduction, fuel efficiency and the enlargement of power and diesel-hybrid cars,” the spokesman says. “We won’t be doing any vehicle research.”

The majority of the work specifically will be for GM, but an element will be shared with the auto industry at large.

“The university will be able to use generic and basic research with other companies, but we have signed confidentiality agreements for the applied research,” the spokesman says.

The EIB, the largest lender for such infrastructure projects in the European Union, has attached strict requirements to the project in order to ensure the money is used for environmental research.

“We support the construction of vehicles that have less impact (on the environment), but we cannot and would not influence the details of the project,” an EIB spokesman says. “We leave that to the specialists.”

The center not only will study increasing energy efficiency in combustion engines, but also will look at how vehicle components can be made more easily recyclable. Work also will explore the construction of materials that reduce vehicle weight.