Nissan announces major UK electric car expansion

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image source, PA Media

Nissan has announced a major expansion of electric vehicle production at its car plant in Sunderland which will create 1,650 new jobs.

The Japanese carmaker will build its new-generation all-electric model at the site as part of a £1bn investment that will also support thousands of jobs in the supply chain.

And Nissan's partner, Envision AESC, will build an electric battery plant.

Prime Minister Boris Johnson called it a "pivotal moment".

Of the £1bn investment, Nissan said it would invest up to £423m to produce a new-generation all-electric vehicle in the UK, building on the success of its existing electric car, the Leaf.

Production of the new model will create 909 new jobs and more than 4,500 in its UK supply chain.

Other production locations have not yet been confirmed. More details about the new vehicle will be released closer to the car's launch date.

Envision's new gigafactory will eventually provide batteries to power up to 100,000 Nissan electric vehicles a year. It will create 750 new jobs and secure 300 existing roles.

It is hoped the new plant will operational in time for 2024, when the level of UK-made components in cars manufactured in the UK is required to start increasing, in line with the terms of the UK's trade deal with the EU.

The majority of Nissan's Sunderland-assembled cars are sold in the EU.

Meanwhile, the BBC has been told that an investment at Vauxhall's car plant at Ellesmere Port is "weeks away" - a move that could secure the future of the plant.

It is expected that a promise of government aid could see Vauxhall's parent company, Stellantis, commit to building a new model at the factory.

From 2030, sales of new cars and vans powered solely by petrol or diesel will be banned in the UK. However, some hybrids will still be allowed.

Mr Johnson said: "The great thing about this investment and the creation of this gigafactory is it is going to drive down the cost of electric vehicles (EVs), not just for people who are currently buying them but so ordinary families can buy EVs as a matter of course and that will start happening in just a few years' time."

Brexit

Ahead of the Brexit deal, Nissan had warned over the future of the Sunderland plant if the government was unable to secure an agreement with the EU.

At the time, Nissan's chief operating officer, Ashwani Gupta, said: "If it happens without any sustainable business case obviously it is not a question of Sunderland or not Sunderland, obviously our UK business will not be sustainable, that's it."

However, on Thursday Mr Gupta told the BBC: "The key success factor for Brexit has always been trade friendly business conditions to sustain our business not only in the UK but in the whole of Europe and thanks to Brexit, Nissan is moving forward to use Brexit as an opportunity."

image source, PA Media
image captionNissan's chief operating officer, Ashwani Gupta, announced the expansion at the firm's Sunderland plant

He declined to say how much money the UK government would contribute to the expansion plan, stating that talks were continuing. "But, for sure, without the government support it would have not been possible," he said.

Mr Johnson said Nissan's announcement was "a major vote of confidence in the UK" and "a pivotal moment in our electric vehicle revolution".

Asked about how much government money was contributing to the new plant, he said: "We will review our support as the project develops and due diligence takes place... and after this details of the award will be in the public domain."

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said the announcement was "great news for the sector, the region and all those employed locally".

However, he told the BBC that for the full transition to electric car manufacturing "it's not enough. We need a lot more. We have a number of factories in the UK, producing up to 1.5 million vehicles. So we need to see this sort of investment multiplied".

"Germany and other parts of Europe, Eastern Europe in particular, are way ahead of us in terms of those committed investments," Mr Hawes said.

The news that Nissan is pumping hundreds of millions of pounds into a massive expansion of UK-based electric car manufacturing is a huge boost to the North East and the UK car industry as a whole. These are long-term investments that will create thousands of jobs. The prime minister and Business Secretary Kwasi Kwarteng will welcome the chance to answer critics who say the UK is falling behind European rivals in securing all-important battery production capacity, seen as essential as a ban on the sale of new petrol and diesel cars in 2030 approaches.

But amidst the euphoria, a few sobering facts. By industry estimates, the UK is currently on course to have less than a tenth of the battery production capacity of Germany by 2025. From 2024, under the terms of the UK-EU Brexit deal, the percentage of components required to be sourced within the UK or EU begins to rise if UK-assembled cars are to avoid tariffs when exported to the EU - where most Nissans are sold. If you don't have a battery industry, you won't have a car industry.

Although the precise details have not been disclosed, the government is thought to have contributed tens of millions of pounds towards the cost of the project. The prime minister will argue that it kills two prized economic birds - decarbonisation and levelling up - with one stone. Workers, unions and local politicians in the North East will consider it money well spent. But industry experts are clear: this must be the first of many such investments if the UK is to keep up with the biggest revolution in car technology since they were invented.

Earlier this week, a report commissioned by the SMMT said a series of factories producing electric car batteries needed to be built in the UK to secure the future of the country's automotive industry.

It said the government should announce a "binding target" of 60 gigawatt hours of battery capacity to be in place by 2030.

image source, Reuters

The report said that at the moment, the UK is on track to have 12 gigawatt hours worth of lithium battery capacity by 2025. This compares with 164 gigawatt hours in Germany.

Business Secretary Kwasi Kwarteng, told the BBC's Today programme: "I don't think we are falling behind. Germany has a huge tradition of automotive manufacturing, we know that, and we are establishing gigafactories here in the UK."

Labour's shadow business secretary, Ed Miliband, welcomed the new gigafactory but said: "Ministers cannot be complacent."

"Only this week, the SMMT said that the government was falling behind our competitors and the Faraday Institution estimates we need seven gigafactories by 2040."

The SMMT-commissioned study, written by policy and research company Public First, also called for the installation of at least 2.3 million charging points nationwide before the end of the decade.

This is aimed at giving confidence to drivers - particularly those with no off-road parking at home - to invest in zero-emission vehicles.

Mr Kwarteng said that this could be achieved: "I think the way in which economies can transform is remarkable and I think nine years to hit those targets is sufficient."

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