Nissan will build three new electric car models at its plant in Sunderland as part of a £2bn investment led by the Japanese manufacturer, in a move welcomed by the UK government and industry.
The factory will produce three separate models, yet to be named, and the decision will require a third “gigafactory” to supply batteries, to add to one in operation and another under construction near to the plant. The Chinese-owned battery company AESC is in negotiations with Nissan over building the third gigafactory nearby.
Nissan said the total investment in the Sunderland area, including the battery factories, will reach £3bn, after £1bn was previously pledged. Nissan will invest £1.1bn in the latest phase, and the rest of the £2bn is expected to come from the battery supplier once it is confirmed.
Nissan did not reveal the size of the government subsidy for its investment, although there are discussions for significant support in return for assurances that battery production will remain in the UK.
The new cars will replace the plant’s three current models: the Qashqai and smaller Juke crossover utility vehicles, plus the Leaf, a pioneering electric car that had been seen as reaching the end of its life. Two of the new models will also be crossovers, which combine sport utility vehicle (SUV) styling with more standard car body structure, while the Leaf replacement will be a smaller compact car.
Friday morning’s announcement comes after leaked plans this week indicated Nissan had decided to push ahead with the replacement of its Qashqai and the Juke models at the north-east England site.
The announcement confirm Sunderland’s position as Britain’s largest electric car factory, and will give its 6,000 workers a central role in the future of the UK automotive industry. Rishi Sunak said the investment was a “massive vote of confidence in the UK’s automotive industry”.
The prime minister and the chancellor, Jeremy Hunt, who mentioned Nissan during Wednesday’s autumn statement, visited the factory on Friday and met Nissan’s chief executive, Makoto Uchida.
The UK’s car industry struggled with uncertainty after the Brexit vote in 2016 and global disruption to semiconductor computer chip supplies from the coronavirus pandemic. However, it has fared better in recent months, with investment announcements from India’s Tata, which will build a £4bn battery factory to supply JLR – the maker of Jaguar and Land Rover, and Germany’s BMW, which is spending £600m to upgrade its factory to build electric Mini cars.
The three new models will roughly correspond to the three existing models, albeit with more futuristic designs and no internal combustion engine versions. The Qashqai was the UK’s bestselling car of 2022, and represents one in five of all cars built in the UK.
AESC makes batteries with a capacity of 1.8 gigawatt hours (GWh) a year at its plant next door to the carmaker. The Chinese-owned company is already building a second site capable of 9GWh nearby.
AESC’s planning for the third phase is already advanced, and it has previously said it could reach 35GWh of annual capacity – which would equate to roughly 600,000 cars, the Sunderland plant’s maximum possible output.
Alan Johnson, a senior Nissan executive in charge of supply chains, said “it would make a lot of sense” for AESC to build the third gigafactory, but that talks were ongoing.
Nissan’s Uchida said he and Sunak discussed ways to keep the UK industry competitive against rival countries, amid competition from China’s fast-growing electric car sector.
Uchida said the investments put “our Sunderland plant, Britain’s biggest ever car factory, at the heart of our future vision”, which includes only selling electric cars in Europe by 2030.
Nissan said its £1.1bn investment would include spending on the factory, the wider supply chain, training for workers and research and development of electric technologies. It will also include wind and solar generation to power the factories with 100% renewable energy, an important consideration in producing zero-carbon batteries and electric cars.
Uchida pushed back against concerns that the shift to electric vehicles would necessarily cost jobs in the future because of more automation. The company was looking at producing more parts such as electric powertrains in the UK in the future, which could make production more efficient.
“It doesn’t mean if we transform to EV that we don’t need a workforce,” he said, adding that the company wanted more suppliers to be based in the UK, “otherwise you will not be able to reach that level on cost”.
Sunak said: “Nissan’s investment is a massive vote of confidence in the UK’s automotive industry, which already contributes a massive £71bn a year to our economy. This venture will no doubt secure Sunderland’s future as the UK’s Silicon Valley for electric vehicle innovation and manufacturing.”
The UK government has granted the north-east of England investment zone status, which gives tax breaks for businesses plus a small amount of grant funding.
