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Nissan’s £1bn upgrade set to boost electric vehicle making in the UK

When Margaret Thatcher cut the ribbon on Nissan’s Sunderland plant 35 years ago, the then prime minister expressed hope it would pave the way for more car makers to invest in Britain.

Sure enough, the Japanese giant’s rivals soon followed, with Toyota setting up shop in Derby and Honda in Swindon – helping to create thousands of jobs in the process.

Now Boris Johnson is trying to repeat the trick with plans to lure electric car makers to UK shores – and Nissan may once again have provided a timely leg-up. 

Green future: Japanese car maker Nissan has unveiled plans for a £1bn upgrade of its Sunderland site (pictured) 

To the Prime Minister’s delight, the company has unveiled plans for a £1billion upgrade of its Sunderland site as it prepares for a green future.

This includes a £423million investment to produce an all-electric model at the plant, as well as electrified versions of the Qashqai and Juke models that are already made there. Nissan produces the all-electric Leaf in Sunderland too, and this will continue.

At the same time, another £450million is being invested by battery maker Envision into a massive ‘gigafactory’ next door that will produce batteries for the cars. The deal is a major boost to Britain’s automotive sector and puts to bed fears that Nissan would exit the UK after Brexit.

It also follows the announcement of similar plans by start-up Britishvolt, which hopes to build another huge gigafactory in Blyth, Northumberland. 

Yet ministers hope this is just the beginning of a wave of new investment into the car industry, which has been battered by coronavirus and faces enormous upheaval.

To ensure this happens, they are seemingly prepared to put serious cash on the table. Nissan said a key influence on its decision was the Government’s willingness to provide support to the project, thought to be worth tens of millions of pounds.

And Kwasi Kwarteng, the Business Secretary, has said he is in talks with other car manufacturers as well about new investment.

He hailed Nissan’s plans as ‘a huge step forward in our ambition to put the UK at the front of the global electric vehicle race, and further proof that the UK remains one of the most competitive locations in the world for automotive manufacturing’.

An artist's impression of battery maker Envision's proposed  £450million  'gigafactory' next door to Nissan's Sunderland plant

An artist’s impression of battery maker Envision’s proposed  £450million  ‘gigafactory’ next door to Nissan’s Sunderland plant

He added: ‘The cars made in this plant, using batteries made just down the road, will have a huge role to play as we transition away from petrol and diesel cars and kick-start a domestic electric vehicle manufacturing base.’

Securing battery ‘gigafactories’ – a term first coined by electric car maker Tesla’s founder Elon Musk – is seen as crucial for any country with serious ambitions to produce electric cars.

This is because the battery is the most valuable component in most electric vehicles. And that distinction will soon become even more important, due to the terms of the UK’s trade deal with the European Union.

Under the accord, cars exported from Britain to the continent will need to have a certain proportion of parts made domestically to avoid being hit with tariffs.

This effectively means fewer components can be shipped in from other countries such as China and Japan for assembly in the UK.

The rules are due to come into force from 2024 and will slowly ratchet up, requiring more and more parts to originate here.

That presents car manufacturers with a choice of either doubling down on the UK, by bringing more production onshore, or winding down their operations as petrol and diesel cars are phased out of use.

Nissan has opted for the former – and said that the decision to make Sunderland its European electric vehicles hub demonstrated a ‘renaissance of the British car industry’.

But other manufacturers such as Vauxhall are still examining their options. The firm is weighing whether to produce electric cars at its Ellesmere Port site in Cheshire, while companies such as BT also want it to cut the price of its electric Vivaro vans by making them at its plant in Luton.

Carlos Tavares, chief executive of Vauxhall owner Stellantis, has previously complained about new costs arising from Brexit and the ‘brutal’ impact of Boris Johnson’s 2030 ban of internal combustion engine cars.

Expansion: Nissan is investing £423m to produce an all-electric model at its Sunderland plant, as well as electrified versions of the Qashqai and Juke models that are already made there

Expansion: Nissan is investing £423m to produce an all-electric model at its Sunderland plant, as well as electrified versions of the Qashqai and Juke models that are already made there

It is now being claimed that talks between the firm and ministers are going well, however, and that an announcement of fresh investment at Ellesmere Port could be just ‘weeks away’.

But despite the upbeat tone, ministers face a ticking clock.

Research institute, The Faraday Institution, estimates Britain will need eight gigafactories by 2040 to meet demand for electric cars.

Without this level of investment, the Society of Motor Manufacturers and Traders (SMMT) has warned of ‘precipitous decline’ for an industry that currently supports 180,000 jobs.

And critics say that it must be secured now or never.

Mike Hawes, the SMMT chief executive, said: ‘The next few years represent a critical period for the sector.

‘The pace of technological change is accelerating and the competition more ferocious.

‘If we are to secure vehicle manufacturing in this country, with all the benefits that it brings, decisions need to be made today.

‘The Government has made clear its support for the sector, so now is the time to go full throttle.’

Alan Johnson, managing director of Nissan’s Sunderland plant, said he believed the future of the UK automotive sector will be ‘extremely positive’.

Referring to Nissan’s investment, he said: ‘This is a foundation for our future.

‘It is huge – and I think only in time will people come to realise just how significant it is.’

That is certainly what Boris Johnson will be hoping as he seeks to revitalise Britain’s car industry once again.