In a factory in Gateshead, engineers carefully wind metal wires around iron cores to go in electric motors. Here, workers produce a smaller “pancake motor”, which generates higher torque than conventional versions for supercars or construction equipment.
These workers form part of north-east England’s automotive industry, which has experienced a long line of political disruptions, from Margaret Thatcher’s efforts to attract international investment, through Brexit and now Andy Burnham’s reindustrialisation strategy.
Across the Gateshead factory, which is owned by Turntide, more people are readying tools to assemble 2.5-tonne prototype battery packs for Hitachi’s hybrid trains, also to be built in the north-east.
The busy factory is just one example of the ripples that have spread out from the centre of the area’s automotive industry, the Sunderland car factory 15 minutes down the road owned by Japan’s Nissan.
Turntide’s business would not be here without its bigger automotive neighbour. Hyperdrive, one of the businesses combined into US-owned Turntide, secured its first batteries from a factory supplying Nissan. The smaller company shows why governments court big manufacturers: they bring stable jobs and can also spark growth in the local economy.
Yet the situation is not so positive across the local industry. Four decades after opening in 1986, Nissan’s underutilised Sunderland plant is hoping to build cars for China’s Chery. The deal, which is still not confirmed, came at just the right time for Sunderland’s workers, with the plant operating at barely half its capacity and facing a series of Brexit threats to its export-led model.
The Nissan factory opened as the keystone of Thatcher’s investment drive. In Sunderland those efforts are mostly seen as a success: the first Bluebird from the plant takes pride of place in the city’s museum. The factory produced 507,000 cars in 2016, just shy of the 510,000 made in 2012, and it was seen as the carmaker’s most efficient plant internationally.
Andy Palmer, who was Nissan’s global chief operating officer before leaving to lead Aston Martin in 2014, said the plant was “the shining star globally for Nissan in the manufacturing world”.
Yet it still had to fight to survive. Nissan closed its other European plant in Spain in 2020 (later selling it to Chery). That survival was “no mean feat”, Palmer said, and came “in spite of everything else” that it had to deal with.
Brexit threats
The list of challenges faced by the global car industry over the past decade is long, with the pandemic and subsequent supply chain chaos, increased protectionism and the rise of Chinese competitors – all while finding cash to invest heavily in electric technology. But Sunderland’s automotive industry in particular became a symbol of a difficulty specific to Britain’s companies: Brexit.
The Brexit vote triggered a decade of political turmoil in the UK, and huge uncertainty for carmakers over whether the Conservative government would pursue a “no deal” exit that would have led to the overnight imposition of tariffs on the UK’s largest export market. Nissan was eventually granted £61m in secret state aid to invest in new models, followed by another £101m in late 2022.
The no deal outcome – seen as a catastrophe by most exporters – was averted but car exporters still have to cope with twin Brexit threats this year. The first is from EU rules of origin that say electric cars made in Britain must contain batteries made in the UK or EU to avoid paying tariffs, and vice versa. The rules were included in the 2020 Brexit deal to spur manufacturers to secure British and EU batteries rather than relying on Chinese imports. However, many of the battery projects have collapsed, leaving the industry short of European supply.
Nissan sources batteries from the next-door gigafactory run by Chinese-owned AESC, but the rules also require crucial cathode materials inside the cells to be sourced from Europe. That may prove too hard, so the automotive industry in the UK and EU is pushing for the latter to extend the rules of origin deadline for a second time. But some industry insiders do not expect an extension until as late as December, as the EU uses it for leverage in negotiations.
The second threat is from the EU’s separate Industrial Accelerator Act that will limit public procurement and subsidies to cars “made in EU” in an effort to protect carmakers from China. Factories in Britain will be locked out under the current draft. British and EU companies (who own most of the UK’s car factories) have called for the UK to be included in the rules. Nissan, which declined a request for an interview, has privately warned the government that Sunderland’s future was at risk.
“It’s not a slam dunk that Nissan will survive,” Palmer said. “If made in Europe excludes the UK then I think it’s existential for Sunderland. Sunderland will die.”
David Bailey, a professor of business economics at the University of Birmingham, said: “Brexit keeps bringing up these uncertainties. The world is changing, and the EU responds to that, and that affects the UK.”
Electric shocks
The big carmakers in the UK are also lobbying hard on another issue the government is considering: watering down electric vehicle targets, known as the zero emission vehicle (ZEV) mandate. The existing rules mean battery cars make up 80% of sales from high-volume manufacturers, but Burnham’s government this month announced the new target could be as low as 50%.
Nissan was an electric pioneer and has invested heavily to build its new electric Leaf and Juke crossover SUV models. Yet the company will welcome lower targets after reportedly shelving development of an electric Qashqai, wary of lower-than-expected demand for battery cars around the world. It has also set its sights on selling new petrol cars beyond 2035, when they are due to be banned.
Some analysts believe carmakers trying to delay the shift to electric are signing their own death warrants by ceding the market to Chinese competitors. Colin Walker, the head of transport at the Energy and Climate Intelligence Unit, a thinktank, said: “Embracing this new technology represents the best chance that manufacturers have to survive and thrive in an electrified world. Pushing increasingly obsolescent technologies will only hasten their demise and would be a recipe for factory closures and mass redundancies.”
A Nissan spokesperson said it was “committed to a fully electric future” and that the mandate “must align with real-life consumer EV demand to ensure a gradual transition to full zero-emission vehicle sales while supporting the competitiveness of UK automotive manufacturing”.
Nissan is undergoing a painful restructuring process worldwide, with the chief executive, Ivan Espinosa, closing seven factories and cutting 20,000 jobs.
If confirmed, Nissan will build cars for Chery, a part-state-owned Chinese carmaker that also makes the Omoda and Jaecoo brands. Nissan would still own the plant and employ the workers and would be able to use its spare capacity – it only managed 273,000 cars in 2025.
Some experts think there is little chance of Chery confirming the deal if the Brexit issues are not resolved. Yet the Unite union is pleased, arguing it would keep volumes up, thus preserving jobs.
For Turntide, the north-east of England still offers what it needs to try to grow its business. David Orgill, Turntide’s vice-president of global operations, said: “Why not here? Why not in the north of England? The supply chain is fantastic up here.”
Turntide’s US parent company, backed by Bill Gates’s Breakthrough Energy Ventures, BMW and Amazon, combined three UK businesses with the aim of expanding sales. It is expecting surging demand for its pancake motors (which are known as axial flux motors because of the different arrangement of their internal magnets). Based on talks with carmakers and construction equipment companies, it wants to expand production to 12,000 motors a year by 2028.
“We’re expecting to grow significantly in the next 18 months,” Orgill said. “We’re actually able to pull back a lot of the capability and manufacturing back into the UK.”
The survival and success of the Nissan plant is seen as politically crucial in the north-east and at Westminster, which partly explains why the government is indeed preparing to weaken the mandate further.
Kim McGuinness, the Labour mayor for the north-east, said Nissan was a key part of the region’s economic plans. She said that despite the political disaffection, Sunderland was thriving, with significant investment in improving the city centre, as well as extra public transport, such as extending a metro line from the city (which lies to Nissan’s east) to Washington, the town to Nissan’s west.
“In the north-east, we all know that factory is absolutely fundamental to our regional economy, but also [to] the position of the country in the automotive industry,” she said, adding that it acted as an anchor for the broader supply chain. “This is what the north-east does very well – that clustering effect”.
McGuinness is hopeful that devolution will help to attract more manufacturing jobs and assuage the “left behind” feeling that drove the Brexit vote and the subsequent rise of Nigel Farage’s Reform UK party, which won control of Sunderland council in May’s local elections. The Reform branch in Sunderland did not respond to requests for an interview.
McGuinness said: “People like me can give local residents more say. I believe that is the way that we combat Reform.”
Even if the Chery deal is confirmed, the north-east’s automotive industry faces a long road to get back to its heyday when Nissan was producing half a million cars. Yet it has got through tricky situations before.
“I admire the plant for surviving,” said Prof Colin Herron, an automotive expert at Newcastle University. “The resilience of the people at that factory is incredible. Now they’re entering a new phase.”
