In a factory in Gateshead, engineers carefully wind metal wires around iron cores to go in electric motors. Here, workers produce a smaller \u201cpancake motor\u201d, which generates higher torque than conventional versions for supercars or construction equipment.<\/p>\n
These workers form part of north-east England\u2019s automotive industry, which has experienced a long line of political disruptions, from Margaret Thatcher\u2019s efforts to attract international investment<\/a>, through Brexit and now Andy Burnham\u2019s reindustrialisation strategy<\/a>.<\/p>\n Across the Gateshead factory, which is owned by Turntide, more people are readying tools to assemble 2.5-tonne prototype battery packs for Hitachi\u2019s hybrid trains, also to be built in the north-east.<\/p>\n The busy factory is just one example of the ripples that have spread out from the centre of the area\u2019s automotive industry, the Sunderland<\/a> car factory 15 minutes down the road owned by Japan\u2019s Nissan.<\/p>\n Turntide\u2019s business would not be here without its bigger automotive neighbour. Hyperdrive, one of the businesses combined into US-owned Turntide, secured its first batteries<\/a> 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.<\/p>\n Yet the situation is not so positive across the local industry. Four decades after opening in 1986, Nissan\u2019s underutilised Sunderland plant is hoping to build cars for China\u2019s Chery. The deal, which is still not confirmed, came at just the right time for Sunderland\u2019s workers, with the plant operating at barely half its capacity and facing a series of Brexit<\/a> threats to its export-led model.<\/p>\n The Nissan factory opened as the keystone of Thatcher\u2019s investment drive<\/a>. In Sunderland those efforts are mostly seen as a success: the first Bluebird from the plant takes pride of place in the city\u2019s 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\u2019s most efficient plant internationally.<\/p>\n Andy Palmer, who was Nissan\u2019s global chief operating officer before leaving to lead Aston Martin in 2014, said the plant was \u201cthe shining star globally for Nissan<\/a> in the manufacturing world\u201d.<\/p>\n Technicians work on the Nissan Juke and Qashqai production line at the Nissan factory in Sunderland. Photograph: Scott Heppell\/AFP\/Getty<\/p>\n Yet it still had to fight to survive. Nissan closed its other European plant in Spain<\/a> in 2020 (later selling it to Chery). That survival was \u201cno mean feat\u201d, Palmer said, and came \u201cin spite of everything else\u201d that it had to deal with.<\/p>\n Brexit threats<\/p>\n 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 \u2013 all while finding cash to invest heavily in electric technology. But Sunderland\u2019s automotive industry in particular became a symbol of a difficulty specific to Britain\u2019s companies: Brexit.<\/p>\n 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 \u201cno deal\u201d exit that would have led to the overnight imposition of tariffs on the UK\u2019s largest export market. Nissan was eventually granted \u00a361m in secret state aid<\/a> to invest in new models, followed by another \u00a3101m in late 2022.<\/p>\n The no deal outcome \u2013 seen as a catastrophe by most exporters \u2013 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<\/a> 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.<\/p>\n 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.<\/p>\n The second threat is from the EU\u2019s separate Industrial Accelerator Act that will limit public procurement and subsidies to cars \u201cmade in EU\u201d 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\u2019s 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\u2019s future was at risk<\/a>.<\/p>\n \u201cIt\u2019s not a slam dunk that Nissan will survive,\u201d Palmer said. \u201cIf made in Europe excludes the UK then I think it\u2019s existential for Sunderland. Sunderland will die.\u201d<\/p>\n David Bailey, a professor of business economics at the University of Birmingham, said: \u201cBrexit keeps bringing up these uncertainties. The world is changing, and the EU responds to that, and that affects the UK.\u201d<\/p>\n Electric shocks<\/p>\n 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\u2019s government this month announced the new target could be as low as 50%<\/a>.<\/p>\n Nissan was an electric pioneer and has invested heavily<\/a> 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<\/a>, when they are due to be banned.<\/p>\n A Nissan Leaf comes off the production line at the Sunderland factory. Photograph: Christopher Thomond\/The Guardian<\/p>\n 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: \u201cEmbracing 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.\u201d<\/p>\n A Nissan spokesperson said it was \u201ccommitted to a fully electric future\u201d and that the mandate \u201cmust 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\u201d.<\/p>\n Nissan is undergoing a painful restructuring process worldwide, with the chief executive, Ivan Espinosa, closing seven factories and cutting 20,000 jobs<\/a>.<\/p>\n 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 \u2013 it only managed 273,000 cars in 2025.<\/p>\n 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.<\/p>\n