Nissan Sunderland under threat from EU EV rules

Nissan’s Sunderland factory could be under threat of closure if the UK is excluded from new European proposals to incentivise EV production, according to reports.

According to the Financial Times, Nissan has privately warned it could be forced to shut the plant if the UK isn’t fully included in the new Made in Europe manufacturing rules.

One source told the paper the factory could face an “existential threat” if it was “frozen out of access to EU incentives”.

The rules – which form part of the proposed Industrial Accelerator Act (IAA) – are designed to protect EU producers from cut-price Chinese competition. They will offer state support and subsidies for EVs sold through corporate fleets as long as they are built in Europe using at least 70% Europe-made components.

They will also offer “super credits” for CO2 trading but only on small electric cars manufactured within the EU.

That would exclude models built at the Sunderland plant and threaten the site’s viability as a large proportion of its output is exported to Europe.

Systematic disadvantage

Mike Hawes, chairman of the Society of Motor Manufacturers and Traders said the current plan would “put UK manufacturers at a systematic disadvantage in the market” and claimed it could breach the post-Brexit EU-UK trade deal.

The Sunderland plant currently builds the hybrid Qashqai, the all-new Nissan Leaf and is due to produce the new all-electric Juke from next year. Around 6,000 people are directly employed at the plant, with an estimated 30,000 additional roles in its wider supply chain.

The EU has left space for UK-built cars to qualify for some incentives but there are different rules for different classes of vehicle, which Nissan said caused confusion.

The Japanese car maker, which reported a loss of £3.8 billion last year, said: “We’re pleased the Commission has addressed industry concerns and recognised how important partners are to the EU supply chain, by allowing ‘content equivalent to Union origin’ to count under the Act.

“This change should let vehicles built in these locations – which often include a lot of EU made parts – qualify for government purchasing and national EV incentives.

“However, using a different definition for corporate fleets and the small car super credit creates confusion and adds unnecessary complexity for the industry.

“A simple solution would be to apply the ‘equivalent to Union origin’ rules across all types of EV support, which would be in line with the EU’s goal of making regulations easier to understand and apply.”

Gravely concerned

A European Commission spokesperson told the Guardian that public support for corporate vehicles would remain limited to EU-built cars. They said: “The IAA is open to the UK when it comes to public procurement and public support schemes for electric vehicles.

“The greening corporate vehicles proposal, on the other hand, limits financial support for the uptake of corporate cars and vans to zero or low-emission vehicles made in the EU.

“The IAA confirms that such financial support for corporate vehicles will be limited to vehicles made in the EU.”

Hawes commented: “The UK automotive sector is gravely concerned by [the] ‘Made in Europe’ proposals set out in the European Commission’s Industrial Accelerator Act. As drafted, it would discriminate against UK-made vehicles and components, damaging a trading relationship worth almost £70bn annually.”