Nissan reprieve turns headlights on battery supply chain

Work at Nissan’s Sunderland plant in north-east England is to continue despite Brexit, the multinational Japanese car giant announced this week. Far from winding down its UK operations as feared, Nissan will instead be pushing forward with production of the latest version of its Qashqai SUV that it was forced to delay last year due to the logistical chaos wrought by COVID-19.

The announcement marks a dramatic departure from Nissan’s previous stance, and was made possible by the last-minute compromise hammered out on Christmas Eve between the UK and the EU that ensures that most car exports between the two sides will be tariff-free, provided they contain enough parts sourced from either side of the Channel. From 2027 onward, all British and European carmakers will also have to source batteries from either the UK or EU or face tariffs on their exports.

In a domestic context, Nissan’s decision is amongst the first positive reaction to come from the business community since the UK officially left the EU on January 1 and will be welcomed by its 6,000-strong workforce and almost as warmly in Westminster, which has been inundated with complaints about mounting costs due to increased paperwork.

From a purely industry perspective, there may be a more specific lesson to be learnt from Nissan’s reasoning as well. Speaking by video link from Nissan HQ in Yokohama, Nissan COO Ashwani Gupta said the Brexit deal had turned out to be positive for the carmaker by giving it a competitive advantage, because unlike many of its rivals, it was not reliant on batteries imported from east Asia. Nissan has agreed a deal with its battery partner, Envision AESC, to produce the 62kWh battery its cars require in a plant adjacent to the Sunderland factory.

All the world’s ten largest Lithium Ion (Li-ion) are based in East Asia. Of those, six are Chinese, so Nissan is also future-proofing itself against the possibility of any US allies getting caught up in the ongoing US-China trade wars.