Brexit has given competitive edge on car battery tariffs, says Nissan chief

Nissan has said Brexit has given the company an edge, as the Japanese carmaker said it will buy more batteries from within the UK to avoid tariffs.

The owner of the UK’s largest car factory, in Sunderland, also said it would push ahead with the production of a new version of its Qashqai SUV this year, after it delayed the new model as the coronavirus pandemic wrought havoc on car sales and production.

Ashwani Gupta, Nissan’s chief operating officer, said: “Brexit gives us the competitive advantage not only within the United Kingdom but outside the United Kingdom also.”

Speaking from Nissan’s Yokohama headquarters, Gupta said the Brexit deal had turned out to be positive for the carmaker. The advantage comes because it is not reliant on batteries imported from east Asia, unlike many of its rivals. From 2027 all British and European carmakers will have to source batteries from either the UK or EU, as agreed in the Brexit deal, or face tariffs on their exports.

The comments mark an abrupt change in tone from Nissan, which along with the rest of the car industry has previously been one of the loudest voices warning against a disruptive Brexit.

The former Nissan chief executive Carlos Ghosn in 2016 said the UK government would have to compensate carmakers for any extra costs caused by the UK’s departure. Nissan eventually secured secret pledges of government aid initially worth £80m, which were later reduced to £61m. The carmaker later made a U-turn on plans to build another SUV, the X-Trail, in north-east England while warning that Brexit uncertainty was harming its business. The Sunderland plant employs about 6,000 people and produced nearly 350,000 cars in 2019, although it has capacity to make 600,000 a year.

The carmaker’s European boss later warned that a no-deal Brexit that resulted in tariffs or quotas on exports from the UK would destroy its entire European business model.

However, the last-minute Brexit deal agreed on Christmas Eve ensured that most car exports between the UK and the EU will be free of tariffs – border taxes charged on foreign imports – provided that they contain enough parts sourced from either side of the Channel.

Nissan’s comments will likely be seen as a boost for the government at a time when many other manufacturers have complained of extra costs and disruption at ports because of Brexit.

The Brexit deal has added new customs paperwork, but Gupta argued the costs were “peanuts” compared with the effects of the Covid pandemic or natural disasters. “For a global manufacturer who is running 150 markets and 14 plants around the world, to have additional documentation, to fill in a form at the border, is nothing,” Gupta said.

Much of the extra paperwork relates to the complex rules of origin that govern whether an export is tariff-free or not. Nissan said that all of the cars manufactured in Sunderland contained enough UK or EU content to avoid tariffs, with the exception of the longer-range electric Leaf.

That model is dependent on imports of valuable batteries with a capacity of 62 kilowatt-hours [kWh] imported from the US. However, Nissan has agreed a deal with its battery partner, Envision AESC, to produce the 62kWh battery in a plant next-door to Nissan’s factory. The Sunderland battery plant, which currently makes batteries with 40kWh capacity, was owned by Nissan until 2019, and supplies Nissan Sunderland exclusively.

The switch of spending from Asia to the UK will probably result in extra jobs in Sunderland, although Gupta said it was not possible to say how many at this stage. He also declined to detail the amount of new investment the plant would require, but said it would be possible to complete it before the end of this year.

The Envision plant, whose annual battery output is about 1.9 Gigawatt hours [GWh], is considered to be relatively small compared with other automotive battery factories. Industry insiders do not generally describe it as a “gigafactory” on the scale of those being built in Europe by the likes of the US electric car pioneer Tesla or Northvolt, a Swedish startup, as they race to meet EU targets to build up a European battery industry.