Nissan has unveiled plans for the UK’s first large-scale battery factory, handing the country’s car industry a much-needed boost as it races to prepare for the era of electric vehicles.
The £1bn investment will safeguard the future of the Japanese company’s plant in Sunderland, where the factory will be built with battery supplier Envision AESC. As part of the plan, Nissan has promised to build a new electric vehicle at its existing plant.
With the UK banning petrol and diesel vehicle sales from 2030, the car industry is under intense pressure to establish the infrastructure, including the supply of batteries, to produce electric cars at scale and protect jobs.
Nissan said on Thursday that as many as 6,000 jobs will be created as a result of the investment, including at the battery factory, employed on its new electric vehicle and along the wider supply chain.
Governments around the world are competing to attract capital to support their own car industries as they shift from combustion engines to electric power.
Business secretary Kwasi Kwarteng said he believes the investment in Sunderland will have a “domino effect”, leading to a “virtuous cycle” as other battery makers back the UK market.
The government is in talks with Stellantis, the newly merged Fiat Chrysler and PSA, over the carmaker’s plan to build a new electric vehicle at the Vauxhall plant in Ellesmere Port, with an announcement expected within weeks. Kwarteng told the Financial Times he was “hopeful of good news” soon.
Ford, Samsung and LG Chem are among the other companies in talks with the government over possible projects, the Financial Times reported last month, while Jaguar Land Rover is expected to announce its battery plans later this summer.
The government has given about £100m of support to the Nissan project at Sunderland, according to people briefed on the discussions.
Of this, £15m will go to Sunderland city council, with the rest split fairly evenly between Nissan and Envision. The council will look to bring in outside investors to finance the rest of its energy development.
To help the first phase of the project, the council will create an £80m local energy grid to provide green power for the site, installing wind farms, solar parks and a dedicated energy storage facility made from second-hand electric car batteries.
Envision AESC, which is already Nissan’s battery supplier and runs a small facility in Sunderland, will spend £450m building the factory and create 750 roles. To make its new electric vehicle, which will use batteries from the factory, Nissan will invest £423m and generate 900 jobs.
Kwarteng called the investment “a huge step forward in our ambition to put the UK at the front of the global electric vehicle race”.
Nissan chief operating officer Ashwani Gupta called it a “landmark day” for the business.
The first phase of the site will have a capacity of 9 Gigawatt hours, able to produce enough batteries for 100,000 cars a year. If demand for Nissan’s electric vehicles rises sharply, Envision may invest a further £1.8bn to expand the new plant to 25GWh by the end of the decade.
Because of their weight, carmakers tend to buy batteries close to the vehicle plant, meaning that facilities in the UK are needed to maintain production at the current sites that include Toyota, Mini, Vauxhall and Jaguar Land Rover.
This week the Society of Motor Manufacturers and Traders warned that Britain needs 60GWh of battery plants just to maintain the current size of the industry. In a worst-case scenario, with only one large-scale project in the country, more than 90,000 roles could be lost, it warned.
SMMT chief executive Mike Hawes said Nissan’s investment is “a real vote of confidence, but is still only one” out of a number that need to happen to safeguard the country’s sprawling network of factories.
“It’s a fiercely competitive industry and we need more than that,” he added.
Ministers have set aside £500m to encourage investors to back the fast-changing car industry, although the sector has warned the sum is too small compared with the €2.9bn the EU is making available to its members.