Nissan’s Sunderland plant has about 6,000 staff and supports almost 30,000 jobs in its supply chain. It currently produces Nissan’s Juke and Qashqai cars, as well as the all-electric Leaf.
Last year 245,650 new vehicles rolled off Sunderland’s production lines, a decline of 29pc on the previous year as coronavirus upset work.
There is already a relatively small battery plant at Sunderland, which is run by Nissan’s partner Envision and supplies batteries for the Leaf.
Professor David Bailey, an automotive industry expert at Birmingham University, said: “This is a huge boost for the UK automotive industry, guaranteeing Nissan’s presence in the UK and its supply chain for at least the medium term.”
Richard Perberdy, head of automotive at KPMG, said: “It is not just about the Nissan’s batteries and electric vehicles. This represents a very long-term commitment which will underpin the broader supply chain and give them confidence to invest.
“This technology does not stand still and this is likely to create a hub for research and development around the plant, as companies seek better performance from batteries, new technologies and materials as well as looking into recycling for them. It all adds up to something very big indeed.”
Nissan declined to comment.
Race for a British gigafactory
The Brexit deal requires that from 2026 electric vehicles produced in Britain must have their batteries built in the UK or EU to qualify for exemption from tariffs, as well as the benefits of exports to third-country nations with which trade agreements have been secured.
Building gigafactories in the UK is critical to the survival of domestic car production – which employs about 180,000 people directly and supports almost 1m jobs in total – mainly because of the high cost of transporting heavy and bulky batteries.
Former Jaguar Land Rover boss Sir Ralf Speth was one of the first to signal just how important they are, warning: “If batteries go out of the UK, then automotive production will go out of the UK.”
Carlos Tavares, head of Stellantis, has also highlighted the need for batteries – which account for about 40pc of the total cost of an electric car – to be manufactured near the plants where they are installed into vehicles.
Assuming that once the pandemic eases UK car production returns to long-term average rates of about 1.5m vehicles a year, and if those cars are to be battery powered, Britain’s car industry will need about 100 gigawatt hours of annual battery production.
So far there are no gigafactories either operating or under construction in the UK. Britishvolt, the start-up trying to build a 30GWh gigafactory in Northumbria, estimates it will cost £2.6bn to build.
Britain will need many more gigafactories and billions in investment if it is to support its existing domestic car industry, let alone expand it. The Faraday Institution, an independent research institute, has calculated that without gigafactories the UK could miss out on 105,000 jobs by 2040.
In the meantime, there are almost 20 battery gigafactories planned or on which work has started on in Europe, including Tesla’s Berlin plant. How far Britain lags in the electric car race was underlined on Monday when China’s Envision outlined a €2bn plan to build a battery plant in northern France to supply Renault.
Mr Kwarteng has also been deeply involved in negotiations with Vauxhall owner Stellantis about taxpayer support to persuade it to invest in building electric vehicles at the company’s Ellesmere Port plant, as the model built there at present comes to the end of its life.