Investment in Nissan batteries in Sunderland is a start, but there is still a long way to go for the UK
It’s good news for the UK auto industry that Nissan and its battery partner will invest in increased battery production – as well as a new electric crossover – at its UK production center in Sunderland. This can rightly be seen as a very positive step in the UK’s largest auto production plant, especially as the global auto industry sees a transformative change ahead. However, there is much more investment needed if Britain’s supply chain is going to support a viable auto industry capable of building a million electric vehicles per year by the end of the decade.
Looking at the Nissan Sunderland announcement, there is also an important backdrop in terms of UK-specific factors that undoubtedly played a role in the decision.
For the automotive industry, it is very clear that we are witnessing a transformative energy transition from the prevalence of the internal combustion engine (ICE) to electrified and battery electric vehicles (BEV). All automakers need to tackle this fundamental change over the next decade, which means both introducing new electric vehicles and securing supply chain capabilities for key components like batteries.
High-value lithium-ion batteries are inherently heavy and automakers wish to avoid long-distance logistics, preferring to manufacture battery packs close to the vehicle’s manufacturing and final assembly plant.
However, there are also important UK-specific factors at work in Nissan’s decision. Nissan’s Sunderland plant has a strong focus on supplying customers in the EU. From 2024, under the UK-EU Brexit trade deal reached at the end of last year, rules of origin requirements are stepped up and subsequently tightened. This means that to be eligible for duty-free circulation in Great Britain, the local content (components sourced from the UK and EU) must be higher than currently on electric vehicles manufactured by Nissan in Great Britain. -Brittany. Nissan will prefer to meet this requirement with UK-made batteries rather than the alternative of long-distance import from potential suppliers on the continent.
What support from the UK government has Nissan taken into account? It’s hard to measure at the moment (and clearly a sensitive subject for Nissan and UK government ministers), but the UK has set itself an ambitious goal of decarbonizing its economy (no pure ICE vehicles for sale at from 2030) and the UK government has stressed the need to ‘level’ the economic position of UK regions. Nissan’s Sunderland plant is a key economic asset in the relatively disadvantaged north-east of England. There is no doubt that London will warmly welcome this Nissan announcement and will have been willing to do everything in its power to make this investment. With EU state aid rules becoming less important for a non-member state (though still subject to Brussels concerns about the UK’s seemingly freer stance), Nissan has been in an ideal position to any negotiations on support measures.
However, as the industry shifts to BEVs from the current low market penetration (currently less than 10% of new car sales for BEVs in Britain), there is still a long way to go for it to be successful. he UK automotive industry is globally competitive and has sufficient supplies. chain manufacturing capacity – particularly in batteries – to meet the much higher volume needs of automakers in the future. Today’s Nissan announcement is a start. But make no mistake, the UK faces very serious competition from future high-volume factories across the Channel.
The stakes – in terms of economic output and jobs – especially as more automation kicks in in future smart factories in the latter part of this decade (with the loss of jobs based on ICE technology) , are very important. Nissan’s latest investment, however, places the UK auto sector firmly in the competition for the very important electric vehicle factories and supply chains (especially batteries and gigafactories) that will take place in Europe in the 2020s.