Nissan, Envision to Create $1.4 Billion U.K. EV-Making Hub

(Bloomberg) -- Nissan Motor Co. said it will create a new 1 billion pound ($1.4 billion) hub for making electric vehicles in Britain, part of the carmaker's revamp of its U.K. electric-car strategy and a post-Brexit boost for Prime Minister Boris Johnson.

Nissan will spend as much as 423 million pounds to produce a new all-electric crossover vehicle at its Sunderland plant in the north of England and Envision AESC will invest 450 million pounds to expand battery-cell making, the carmaker said Thursday in a statement.

The investment partnership, which includes the Sunderland City Council, “is a major vote of confidence in the U.K. and our highly-skilled workers in the North East,” Johnson said in the statement. “This is a pivotal moment in our electric vehicle revolution and securing its future for decades to come.”

Envision will create a battery manufacturing facility with an annual capacity of 9 gigawatt-hours, up from the 1.7 gigawatt-hours facility it currently operates. The plant will be ready in 2024 at the earliest, Envision Group Chief Executive Officer Lei Zhang, who leads the Chinese parent of Envision AESC, said on the sidelines of a press conference in Sunderland.

Envision Group earlier this week announced it'll spend as much as 2 billion euros ($2.4 billion) on a battery plant in northern France to power EVs made by Renault SA. The deals with Envision create a common supplier for the car-making partners whose alliance has been strained in recent years.

China's Envision to Build Renault $2.4 Billion Battery Plant

Nissan and Renault's moves follow other manufacturers such as Volkswagen AG in stepping up the pace of battery supply as they hasten the rollout of electric cars. In the U.K., carmakers face additional pressure to ensure an adequate local production network to avoid tariffs when trading with the European Union.

Alliance Tie-In

The move by Renault and Nissan to opt for a common supplier for at least one type of EV battery shows progress after previous missteps within their decades-old partnership. The two automakers were unable to reach agreement on a common battery or platform for their Zoe and Leaf models, failing to reap cost-saving benefits such collaboration might have generated.

“The decision to have one module of batteries common to the alliance is a major element and a sign the alliance is working very well,” Renault Chief Executive Officer Luca de Meo said in a Bloomberg TV interview Wednesday. “We agree to a common approach.”

Nissan's investment also is a boon for Johnson's government as it seeks to support the U.K.'s car industry following Britain's split from the EU. In the rocky period since the referendum, investment in the nation's vehicle manufacturing plummeted. Stellantis NV has weighed the closure of its Ellesmere Port plant in England while Honda Motor Co. will shut a factory in Swindon that employs about 3,500 workers.

Nissan said the investments will create more than 900 jobs at its U.K. operations in addition to 750 new jobs at the Envision AESC facility to be built adjacent to the vehicle assembly plant.

The Japanese carmaker currently manufacturers the all-electric Leaf hatchback at its Sunderland factory, which employs about 6,000 people. It also produces the Qashqai and Juke crossover models with a capacity of around 350,000 vehicles annually. The upcoming EV crossover will be made on new underpinnings developed by the alliance.

Growing EV Demand

Britain became the second biggest market for EVs in Europe during the first quarter this year, second only to Germany. Demand is expected to accelerate as a government ban on the sale of petrol cars kicks in from 2030.

The U.K. currently has capacity to manufacture 2 gigawatt-hours of batteries. The Advanced Propulsion Centre, tasked with allocating the government's 500 million pounds of funding for battery-cell making, estimates that demand by 2030 will be at least 90 gigawatt-hours.

The planned Envision facility could be expanded to include a “potential future-phase investment of 1.8 billion pounds” to generate up to 25 gigawatt-hours and create as many as 4,500 new jobs in the region, Envision said in the statement issued by Nissan.

Nissan sold its controlling stake in its AESC battery operations to Envision in 2018 while retaining a 20% holding in the division. The facility currently employs about 300 people.