Green Light for AESC Gigafactory Boosts UK Manufacturing

The UK Government is investing in a new gigafactory for electric vehicle batteries in Sunderland. 

The project, led by battery manufacturer AESC, is set to receive £1bn (approx US$1.3bn) in combined public and private funding. 

This factory, which will have an annual capacity of 15.8 GWh to power electric vehicles,  will boost UK battery manufacturing capacity and create more than 1,000 jobs.

Funding and financial support

The UK government will provide direct and indirect funding to help build the facility. This includes financial guarantees from the National Wealth Fund and UK Export Finance. 

These guarantees will unlock £680m (US$898m) in loans from banks such as HSBC, Standard Chartered and SMBC Group. 

John Flint, CEO of the National Wealth Fund, said the new plant will support the UK’s goal to hit net zero targets: “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.”

The UK’s Automotive Transformation Fund will also give £150m (US$198m) in grant support. A further £320m (US$422m) comes from private financing and new equity from AESC. 

The deal follows a trade agreement between the UK and the US which reduces tariffs on 100,000 UK-made cars, including electric vehicles, from 17.5% to 10%.

HSBC has played a key role in the financing. Ian Stuart, Chief Executive at HSBC UK, 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.”

Natalie Blyth, HSBC’s  Global Head of Sustainable Finance and Transition, added: “Fantastic to see HSBC play a lead role in the financing of AESC‘s second gigafactory in Sunderland, a landmark transaction supporting the UK’s electrification of vehicles.”

AESC's background and UK footprint

AESC is a battery manufacturer based in Japan. It was founded in 2007 as a joint venture between Nissan and TOKIN Corporation. In 2019, Envision Energy, a Chinese clean energy firm, bought part of Nissan’s stake. 

Today, the firm makes lithium-ion batteries and its technology is used in more than a million vehicles worldwide. The company also provides over 15GWh of battery capacity for energy systems in more than 60 countries.

AESC opened its first UK factory in Sunderland in 2012. It was the first battery plant in Europe and remained the UK’s only battery plant for over 10 years. 

That facility has a 1.8GWh annual capacity and has produced enough batteries for 250,000 vehicles.

Shoichi Matsumoto, Chief Executive of AESC, described the investment as a milestone for the company and the UK’s push to decarbonise: “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 a resilient, sustainable supply chain.

“We are honoured to contribute to the development of a low-carbon economy with our advanced battery technologies.”

Gigafactory scale and future impact

AESC confirmed the plan to build the new Sunderland gigafactory in 2021. Construction began in December 2022 with a Japanese “first pillar” ceremony – in which a bolt was tightened on the factory’s first pillar to mark the occasion. 

Once finished, the new site will cover an area the size of 23 football pitches and require 14,000 kilometres of cabling.

The plant is designed to be powered by 100% carbon-neutral energy. When running at full capacity, it will produce 15.8GWh of batteries every year and employ over 1,000 people.

Rachel Reeves, the UK Chancellor of the Exchequer, said: “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.”

Jonathan Reynolds, Business and Trade Secretary, added: “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.”

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