Nissan is reportedly in talks with Chinese automaker Chery to build electric vehicles at its Sunderland plant in the UK.
This potential partnership is primarily driven by powerful economic and policy shifts, especially the European Union's stance on Chinese EVs. The EU has imposed significant anti-subsidy duties on electric vehicles imported from China, which can push total tariffs to over 45%. For a company like Chery, which is expanding aggressively into Europe, these duties represent a major barrier. By manufacturing cars within the UK, Chery could effectively bypass these tariffs and gain a crucial competitive edge in the European market.
For Nissan, the motivation is just as compelling but comes from a different challenge: plant utilization. Its Sunderland facility, the largest car factory in the UK, is running at less than 50% of its capacity. Such low utilization is financially unsustainable and puts thousands of jobs at risk. Nissan's management has openly stated they are looking for partners to fill this production gap, and a deal with a high-volume producer like Chery presents an ideal solution to secure the plant's future.
The timing and location for this potential deal are particularly strategic. First, the UK and EU have temporarily relaxed the Rules of Origin for EVs until the end of 2026, making it easier for cars built in the UK to be exported to the EU without tariffs. Second, the UK government has actively supported the development of an EV supply chain around Sunderland, including funding for a major battery gigafactory (AESC). This established ecosystem makes the plant a turnkey solution for a new entrant like Chery.
Looking back, the path to these talks was paved by several key events. The EU's anti-subsidy duties, finalized in late 2024, created the initial push for Chinese automakers to localize production. Then, Nissan's CEO publicly signaled his openness to building cars for a Chinese partner in early 2026. Finally, a recent successful asset deal between Nissan and Chery in South Africa demonstrated a working relationship and trust, reducing the risk for a more complex partnership in the UK. This isn't a sudden development but a logical convergence of interests.
- Anti-subsidy duties: Tariffs imposed by a country to offset government subsidies provided to producers in an exporting country, which are seen as giving them an unfair advantage.
- Rules of Origin (RoO): Criteria used to determine the national source of a product. In trade agreements, they are crucial for deciding if a product qualifies for tariff-free access.
- Plant Utilization: A measure of how much of a factory's total production capacity is being used. It is calculated as (Actual Output / Maximum Potential Output) x 100.