UK, not Nissan, gains most from Brexit deal

Nissan's announcement that it will bring more battery production to the UK is a rare win for the post-Brexit UK, but it's not necessarily a win for Nissan.

Nissan has been one of the most vocal companies in warning the UK government of the dangers of a bad Brexit deal with the EU, threatening to close its vast and productive Sunderland plant if tariffs made it uncompetitive.

On Thursday however, Nissan chief operating officer Ashwani Gupta was full of praise for EU-UK trade deal that agreed to remove potential tariffs, describing it as an "opportunity" for Nissan that gave it a "competitive advantage."

He described the extra paperwork and port congestion resulting from Brexit as "peanuts" to a company used to dealing with different trading regimes globally.

In a call to UK journalists, Gupta pointed, as evidence of this competitiveness, to the decision by Nissan's on-site battery supplier Envision to add production of the 62 kilowatt-hour battery pack for the longer-range Leaf at the Sunderland site later this year, at Nissan's request.

Currently the cell-production facility, one of very few battery facilities of its type in the UK, only makes the 40kWh battery for the cheaper Leaf. The 62kWh pack is currently imported from Nissan's US plant in Smyrna, Tennessee.

Gupta, however, pointed out that the rules of origin governing the amount of local content in the UK-EU agreement mean the longer-range Leaf would have attracted tariffs with the US-battery pack.

"All of our models which are manufactured in Sunderland qualify under local content rules, except one, the Leaf with the higher-range battery 62kWh pack," Gupta said. "So, we decided today to build this pack in the United Kingdom."

This is a win for the UK. Countries regularly put up trade barriers with their neighbors to protect and encourage local industry, and this is a good example.

Nissan does not want to pay more tariffs to export the long-range Leaf to mainland Europe, so persuaded its supplier to shift some manufacturing from the U.S. to the UK, likely boosting employment at Envision.

But it's not necessarily a win for Nissan. It could have located battery production there at any point, but the move only came with the threat of tariffs. After taking the decision to shut its plant in Barcelona, Spain, it had no choice but to back Sunderland, where it also builds the Juke small SUV and the Qashqai compact SUV, the third generation of which is due this year.

The move was applauded by UK prime minister Boris Johnson, who so far has had little in the way good news to report in terms of Brexit benefits. "This is a great vote of confidence in the UK and fantastic news for the brilliant @Nissan workforce in Sunderland and electric vehicle manufacturing in this country," he tweeted on Friday.

Nissan has a reason to give the government some good news. After initially appearing to include hybrids in the surprise announcement last year that it will ban the sale of new combustion-engine cars in 2030, the UK government then reversed that and signaled it will allow hybrid sales for another five years.

Nissan, along with Toyota, will benefit hugely. The next generation Qashqai will dump diesel in favor of a hybrid system dubbed E-power that Nissan hopes will reinvigorate sales in the region.

As the rules of origin get tougher on electrified vehicles imported into the EU, Gupta signaled Nissan will localize more electrified parts in the UK, without giving details.

With its sole European plant located in the UK, Nissan has no choice but comply, bringing a rare Brexit benefit.