- Chancellor visited Sunderland today following landmark economic deal with the US that saved thousands of auto jobs and slashed tariffs on car exports
- Latest action in the Government’s Plan for Change to strengthen our industrial heartlands, make Britain a clean energy superpower and put more money in people’s pockets through good jobs
Working people will benefit from 1,000 jobs at a new state-of-the-art gigafactory in Sunderland in a £1 billion auto deal to accelerate the transition to electric vehicles and boost growth.
This investment is another boost for the British car industry after yesterday’s landmark economic deal with the United States saved thousands of jobs by slashing 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 – making the UK globally competitive selling more British EVs at home and abroad and helping to achieve our net zero target.
In the landmark transaction, the 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 AESC.
In addition to this £1 billion investment, the Government’s Automotive Transformation Fund is also investing £150 million in grant funding.
This is the Government’s Plan for Change in action, making us more competitive on the world stage, helping Britain on its way to becoming a clean energy superpower through innovation in the automotive sector, and delivering economic growth that puts more money in people’s pockets through high skilled jobs.
Chancellor of the Exchequer, 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.
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.
The Chancellor visited AESC in Sunderland today (Friday 9 May) where she met staff and local leaders to discuss how the investment will bring jobs and prosperity to the North East, and how the landmark 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 Japanese headquartered 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.
More information
- The government continues to unlock private investment in UK automotive design, development, and manufacturing as the sector transitions to zero emission technology.
- To date, the Automotive Transformation Fund and Advanced Propulsion Centre funding programmes have leveraged over £6 billion of investment from the private sector.
- Last year’s Autumn Budget also confirmed over £2 billion for capital and research and development funding over five years for zero emission vehicle manufacturing and their supply chains – a vote of confidence in the UK’s automotive industry, supporting investment and productivity growth.
Additional quotes
Ian Stuart, UK CEO for HSBC who were joint ECA Coordinator & Structuring Bank (alongside SCB) as well as Underwriting Bank and Mandated Lead Arranger, 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, states
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.
