By Dominic Chopping

STOCKHOLM--Truck maker Volvo AB said Thursday it has signed a collaboration agreement with Swedish steel company SSAB AB on research, development, serial production and commercialization of vehicles made of fossil-free steel.

Volvo said it plans to start production of concept vehicles and components from steel made by SSAB using fossil-free electricity and hydrogen this year, with plans for smaller-scale serial production to start during 2022 and a gradual escalation towards mass production to follow.

"We are determined to be a climate-neutral company by 2050 in line with the Paris Agreement," said Volvo Chief Executive Martin Lundstedt.

"This means that our vehicles and machines will be emission-free when in operation but also that we will review the materials, like steel, used in our products and will gradually switch to fossil-free alternatives here as well," he said.

Volvo and SSAB will also work together in research and development to optimize the use of steel in Volvo's products with regard to weight and quality, Volvo said. Together, the two companies will develop a number of products of fossil-free steel.

The collaboration also includes a review of SSAB's environmental impact from logistics, with an ambition to use Volvo vehicles that are powered by batteries or fuel cells, Volvo said. SSAB aims to start supplying the market with fossil-free steel on a commercial scale in 2026.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

04-08-21 0318ET