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Nissan will lead a £2bn investment in its Sunderland car plant to make two new electric models at the site and build a third UK battery factory, said the Japanese carmaker on Friday.
The company said it would invest up to £1.12bn to manufacture electric replacements for the Qashqai and Juke models, which it currently builds alongside the electric Leaf at the facility in north-east England. The rest of the investment will go into the new battery factory and supporting energy infrastructure, and is expected to come from its battery supplier, China’s Envision.
Envision owns AESC, which supplies Nissan and already runs one large battery plant in Sunderland. It is building a second factory on the same site. The third factory would be built on a supplier park next to the Sunderland plant, said Nissan on Friday.
AESC chair Lei Zhang said the company had begun a “strategic feasibility study focused on the potential expansion of our gigafactory operations in Sunderland” in order “to meet increasing battery demand from Nissan”.
Nissan and AESC have already committed £1bn to the second battery factory and producing a new electric model to follow the Nissan Leaf in 2021. The announcement on Friday brings the companies’ total UK investment in new electric cars and batteries to £3bn.
The investment is aided by government funding that may run into hundreds of millions of pounds, said two people briefed on the talks.
Prime Minister Rishi Sunak said the investment was “a massive vote of confidence in the UK’s automotive industry”. Nissan’s factory is the largest car plant in the UK.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, called the investment “tremendous news” that “underlines Britain’s position as an increasingly competitive location for electric vehicle production”.
Chancellor Jeremy Hunt this week unveiled £2bn in funding to help the UK car industry switch to making electric vehicles.
In September, BMW said it would invest more than £600mn to make electric Minis in Britain, while JLR owner Tata announced plans for a £4bn battery gigafactory.
Nissan said on Friday it would also lead a £30mn investment in its research facility at Cranfield in Bedfordshire to develop future models, backed by £15mn of support from the government.
Chief executive Makoto Uchida, who was in Sunderland for the announcement, said the investment put the factory “at the heart” of the company’s plans for the future. “With electric versions of our core European models on the way, we are accelerating towards a new era for Nissan, for industry and for our customers.”
Nissan has committed to selling only electric vehicles in Europe by the end of the decade. In September, Uchida said the world “needs to move on” from combustion engines.
Nissan is also exploring making its existing petrol vehicles at the Sunderland factory alongside the new electric models, said manufacturing head Alan Johnson.
Producing them together would increase utilisation of the factory, he added, as well as giving Nissan flexibility to export petrol cars to non-EU markets as European sales dwindle.
However, the company has said it will not launch another new non-electric car in Sunderland and the factory is expected to be producing only electric models by 2030.
The investment also comes as UK electric vehicles sales slow.
The Office for Budget Responsibility, the independent fiscal watchdog, this week slashed its forecasts for electric car sales in the UK in 2027, citing higher prices, higher interest rates and uncertainty caused by the government’s decision to push back a planned ban on new petrol car sales from 2030 to 2035.
