Sunderland is poised to become a powerhouse in electric vehicle (EV) battery production following a monumental £1 billion investment in a state-of-the-art gigafactory. The announcement, made today by HM Treasury on May 9, marks another significant win for the British car industry, hot on the heels of a landmark economic deal with the United States that promises to safeguard thousands of automotive jobs.

The substantial investment will see AESC, a Japanese-headquartered battery technology leader, construct a cutting-edge gigafactory in Sunderland. This ambitious project is projected to create 1,000 skilled jobs in the region and will have the capacity to power up to 100,000 electric vehicles annually. This represents a six-fold increase in the UK’s current lithium-ion based EV battery manufacturing capacity.

The £1 billion funding package is a collaborative effort, leveraging both public and private sector finance. The National Wealth Fund and UK Export Finance (UKEF) will provide crucial financial guarantees, unlocking £680 million in financing from a consortium of major banks including Standard Chartered, HSBC, SMBC Group, Societe Generale, and BBVA. This substantial financial backing will cover the construction and operational phases of the new gigafactory. An additional £320 million has been secured through private financing, complemented by new equity from AESC. Furthermore, the government’s Automotive Transformation Fund is contributing £150 million in grant funding to the project.

The news arrives on the heels of a significant economic agreement with the United States, which includes slashing tariffs on UK car exports from 27.5% to 10% for a quota of 100,000 vehicles – nearly the total exported last year. This tariff reduction is expected to save British car companies hundreds of millions of pounds, further securing high-skilled jobs in regions like Sunderland.

Chancellor of the Exchequer, Rachel Reeves, emphasized the government’s commitment to strengthening industrial heartlands and fostering clean energy growth. “We are going further and faster to boost our industries’ resilience and encourage their growth as part of our Plan for Change,” she stated. “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.”

Business and Trade Secretary, Jonathan Reynolds, echoed the Chancellor’s enthusiasm, highlighting the significance of this investment for the North East. “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,” he affirmed.