The European Union Commission on Wednesday approved €84 million in German government aid to a joint venture between Siemens AG’s automotive division, Siemens VDO, and Volkswagen AG, Dow Jones reported.

Last March, the companies said they would invest a total of €270 million in the 50-50 venture, known as Volkswagen Mechatronic GmbH & Co, the report said.

According to Dow Jones, the commission said the aid will finance the construction of a new plant to make injection systems for diesel engines in the East German region of Saxony. Construction began last spring, the first output is expected in late 2004 and the project will employ about 380 people in a first stage, rising to 690 for 2007.

The technology is aimed at lowering fuel consumption and exhaust emissions in diesel engines to comply with tighter E.U. regulations, which come into effect in 2005, Siemens said, according to Dow Jones.