Up to 1,000 jobs are to be created at a new state-of-the-art gigafactory in Sunderland in a £1 billion auto deal to accelerate the UK’s transition to electric vehicles and boost growth.
The investment is another boost for the British car industry after the UK government’s economic deal with the United States slashed tariffs on British exports.
The new AESC gigafactory will manufacture batteries for electric vehicles, powering up to 100,000 EVs each year — a six-fold increase on the country’s current capacity.
The UK’s National Wealth Fund and UK Export Finance will provide financial guarantees which unlock £680 million in financing from banks including Standard Chartered, HSBC, SMBC Group, Societe Generale and BBVA.
This will cover construction and operation of the new plant. The remaining £320 million has been secured through private financing in addition to new equity provided by Japan-based AESC.
In addition to this £1 billion investment, the UK Government’s Automotive Transformation Fund is also investing £150 million in grant funding.
UK finance minister Rachel Reeves said: “We are going further and faster to boost our industries’ resilience and encourage their growth as part of our Plan for Change, and this investment follows hot on the heels of yesterday’s landmark economic deal with the US which will save thousands of jobs in the industry.
“This investment in Sunderland will not only further innovation and accelerate our move to more sustainable transport, but it will also deliver much-needed high quality, well-paid jobs to the North East, putting more money in people’s pockets.”
UK Business and Trade Secretary Jonathan Reynolds said: “We’re backing our world-class car industry, and this investment is yet another vote of confidence in the North East’s thriving auto manufacturing hub which will secure a thousand well-paid jobs and boost prosperity across the region.
“Our modern Industrial Strategy will drive this growth even further, powering our high-potential sectors like advanced manufacturing so we can deliver jobs and investment in every corner of the UK and make our Plan for Change a reality.”
Reeves visited AESC in Sunderland on Friday where she met staff and local leaders to discuss how the investment will bring jobs to the North East of England, and how the UK government’s economic deal secured with the US will secure the industry for years to come.
The deal slashes car export tariffs from 27.5% to 10% and will apply to a quota of 100,000 UK cars – almost the total exported last year.
This will save some car companies hundreds of millions of pounds, making high skilled jobs in industrial heartlands like Sunderland more secure.
Shoichi Matsumoto, CEO of AESC, said: “This investment marks a key milestone in AESC’s ongoing efforts to support the UK’s path towards decarbonisation and the expansion of its EV market.
“Through close collaboration with strategic partners, we strive to accelerate this transition while creating high-quality local jobs and building resilient, sustainable supply chain.
“We are honoured to contribute to the development of low-carbon economy with our advanced battery technologies.”
John Flint, National Wealth Fund CEO, said: “AESC’s gigafactory will not only help to retool our car industry for net zero it will also support jobs, growth, and prosperity in the Northeast.
“This investment further demonstrates the significant role NWF is playing to crowd private capital into the industries and regions where its most needed, boosting government’s growth and clean energy missions.”
UKEF CEO Tim Reid said: “This hugely exciting project is a prime example of how export financing is a powerful tool for unlocking growth opportunities for British exporters and strengthening local economies.
“We’re proud to join forces with partners to back this pioneering gigafactory that will help cement the UK’s prowess as an EV battery-making force for years to come.”
Ian Stuart, UK CEO for HSBC, said: “We’re extremely proud to have played a leading role in this complex and significant deal, including as underwriter, structuring bank and joint ECA co-ordinator.
Once operational, the gigafactory will unlock a huge increase in the UK’s EV battery production, supporting the electrification of vehicles and the wider green transition. The inward investment involved in the project will also deliver highly-skilled jobs and economic growth to North East England.”
Hideo Kawafune, CEO, Head of EMEA, SMBC Banking International plc, said: “SMBC Group is delighted to participate in the successful financing of this landmark Gigafactory project. As a lending partner we’re proud to work alongside partners such as National Wealth Fund, UK Export Finance and Sinosure, as well as existing client AESC, in order to support projects which power the energy transition.”
Saif Malik, CEO, UK and Head, Client Coverage, UK, Standard Chartered, said: “We are proud to support this transformative UK project. The development of AESC’s new gigafactory will deliver significant economic benefits locally while supporting the development of zero-emission technology.
“This is more than an investment in infrastructure, it’s a commitment to innovation, UK economic growth and sustainability. Supporting the transition to net zero is deeply embedded in how we operate as a Bank, and this project reflects how we bring that to life by supporting clients on their own sustainability journeys.”
Lenaig Trenaux, Societe Generale’s Global Head of Batteries, Mining and Industries, said: “We are proud to have worked with AESC to deliver the first gigafactory project financing in the UK, which has benefitted from strong support from the National Wealth Fund and UK Export Finance.
“Societe Generale’s deep understanding of the EV value chain, coupled with our experience working with AESC, were instrumental in delivering the project financing.
“This is another demonstration of SG’s commitment to the green mobility and another step towards the energy transition.”
Beatriz Roa, Global Sectoral Head of Industrials at BBVA, said: “BBVA is proudly supporting AESC in this landmark project in the UK. This gigafactory will help foster the transition to electric vehicles while supporting the buildup of an entire ecosystem around battery manufacturing in Sunderland. These are key objectives in BBVA’s efforts to support the transition to a more sustainable economy and to the auto and energy industries in particular.”
Colin Walker, Head of Transport at the Energy & Climate Intelligence Unit (ECIU), said: “This is exactly the type of investment that is needed if the UK’s car industry’s future is to be secured. 80% of the cars built in Britain are exported, and global sales of EVs are only going in one direction – up.
“The future of our car industry depends on successfully moving with this trend, with the Government supporting the car industry in carving out a space for itself in the decades ahead by making a rapid transition to building the electric cars of the future.
“Analysis from CBI Economics has shown that by slowing the transition to EVs, clinging to old technologies, the UK risks repeating the mistakes of the 70s and 80s, leading to a rusting car industry, billions in export revenue foregone, factories closing and hundreds of thousands of jobs being lost.
“Go fast, and our car industry will not only survive, it will thrive, with earnings increasing and thousands of new, highly-skilled and well-paid jobs being created”.