Nissan has unveiled plans for a “gigafactory” battery plant as part of a £1bn investment in its Sunderland plant. Chinese battery maker Envision will provide more than half of the capital for the collaboration. The UK government will get a fillip via jobs for a depressed city. The troubled Japanese carmaker stands to gain most.

Nissan will spend as much as £423m to produce a new electric crossover vehicle. Envision AESC, which took the name after Nissan sold its battery unit AESC to Envision Group in 2018, will invest £450m.

Envision’s investment should increase capacity more than fourfold to 9 gigawatt-hours (GWh). That is equivalent to batteries for 100,000 cars a year. Depending on sales, Envision may invest another £1.8bn to expand the plant to 25GWh by the end of the decade.

The UK badly needs extra battery manufacturing. EV sales more than doubled last year to 108,000. Local battery manufacturing capacity is equivalent to less than a fifth of that.

Nissan plans to export new crossovers built in Sunderland to the EU. Batteries, which generally make up about half the cost of an electric car, would have impeded this plan if they were Asian-made. At least 40 per cent of an EV by value has to be produced in the UK or EU to avoid tariffs until 2023. Thresholds rise after that. UK-made batteries should solve the problem.

Envision Group plans to spend €2bn on a much bigger battery plant in northern France for new EVs made by Renault. The French carmaker is linked to Nissan via a fraught manufacturing and shareholding alliance. The partners should be able to realise big cost savings from using the same battery technology and supplier.

Renault and Nissan used different battery technologies for their Zoe and Leaf EVs, missing out on benefits from shared development and manufacturing. Analysts expect the Envision plant to give Renault cost savings of up to 50 per cent on batteries by 2030. Similar savings should bolster Nissan too.

Nissan is making a big bet on Sunderland. China’s low-profile Envision, in turn, is making a big bet on Nissan. The Japanese carmaker is hardly a frontrunner in the transition from petrol cars to EVs.

The Lex team is interested in hearing more from readers. Please tell us what you think of Nissan and Envision’s investment in Sunderland in the comments section below.

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