Is Nissan Set to Make the UK its Eectric Car Base?

While the news that Nissan will start producing batteries for electric cars at its Wearside factory in the north-east of England may have missed the headlines in many newspapers this could in fact be the beginning of a significant boost for the UK electric car industry. Gordon Brown and Peter Mandelson were very keen visitors to the plant today to announce the £200 million investment by the Japanese giant which will be accompanied by significant backup from the UK government. The investment will create a further 350 new jobs for the Wearside plant but more importantly it could yet open up the potential for further investment in the future.

Why is the battery plant so important?

Even though the various electric cars which are hitting the worldwide market have grabbed the attention of the news media there is no doubt that the battery power for these vehicles is an essential element. The technology for electric cars has been around for literally hundreds of years although one of the main drawbacks in recent times has been battery technology.

There have been significant improvements in battery technology over the last few years which have allowed the electric car market to prosper although it has yet to hit the mass market and make a significant dent into the more traditional vehicle market. However, a £200 million investment into the battery plant in Wearside gives the impression that Nissan is potentially looking at the UK as a base for its electric car manufacturing.

On a more sombre note for the UK (but a positive point for the European electric car market) it is worth noting that Nissan has also set up a new electric car battery plant in Portugal which could offer competition for the UK operation, even though the UK has a very successful historic partnership with Nissan and other Far Eastern car manufacturers.

UK government assistance

While the UK government has come in for some criticism over the last few months regarding the slow progress of a multibillion pound loan to struggling car manufacturers in England it would appear that the Nissan project dovetails perfectly with the governments "green" plans for the future. As a consequence, Peter Mandelson also announced that 750 charging points would be installed across the Northeast and a specialist training centre created which will focus upon the manufacture and maintenance of low carbon vehicles.

This will be a real test of the UK government's resolve and determination to break into the electric car market, which many believe is the vehicle market of the future, and the potential to save jobs which could otherwise be lost in the car industry is a massive plus point. The authorities have already promised to look at grants and loan guarantees for Nissan in a move which should support the so-called Automotive Assistance Program.

Is Nissan just playing the system?

While the UK government will be blowing the trumpet of Nissan and the electric car market for some time to come there is some scepticism on the ground with regards to Nissan and its past and future strategies. Even though there is no doubt that Nissan has invested a massive amount of money into the UK over the last 20 years it is worth remembering that the company has also received hundreds of millions of pounds of grants and assistance from the UK government.

A number of former Nissan workers in the region have pointed out that the company obtained massive government backing for ventures in the past, took on more staff and was then "forced" to announce redundancies when sales of particular vehicles began to drop off. Even though this is a particularly sceptical view of this situation, and there will be more detractors before the electric car market hits the big stage, both Nissan and the UK government may well have a point to prove in the short, medium and longer term.

Employment in the north-east of England

The north-east of England became an unemployment hotspot after the demise of coal mines in the 1980s and 1990s. However, the introduction of companies such as Nissan has turned around areas such as Wearside and injected life into a local community which was literally struggling to survive. Nissan is not the only company to have taken up the offer of financial assistance from the UK government in the past and there are hopes that not only will Nissan expand its operations in Wearside in due course but others will follow.

When you balance out the potential for the future of the electric car market, assuming that Nissan does actually manufacture vehicles in the UK in the future, even the investment of a couple of hundred million pounds of taxpayer’s money could have massive long-term benefits for the region.

How strong is the UK government's commitment to the electric car market?

It is interesting to see that the UK government has taken up the electric car market challenge very much quicker than a number of competing governments in Europe and around the world. There are similarities to the UK government's eagerness to become involved more heavily in the Internet market where there is potential for enormous income streams to be created. If the government can in some way ensure that the UK becomes a focal point for one or more electric car manufacturers in the world then this could turn out to be a self fulfilling prophecy.

However there is a need to ensure that the investment of taxpayer’s money does create a return for the UK population in terms of employment and corporation tax for the government. The close relationship with Nissan has worked in the past and many believe the future looks rosy if the UK authorities can at some stage secure actual manufacturing of electric cars in the UK. While today's announcement centres upon batteries for electric cars the significance of this should not be lost as ultimately it could and should attract the actual manufacture of vehicles next to the plant.

Conclusion

This move by Nissan is one of the more interesting steps in the electric car market in the UK of late. It comes at a time when the industry as a whole is struggling although the electric car market, in the opinion of many experts, is ready to explode due to a number of factors.

As we saw in the 1980s and 1990s, the UK government attracted significant investment from the likes of Nissan into the north-east, and especially the Wearside plant, as well as other areas of the country. If this can be replicated in the fairly immature electric car market then the UK could become a focal point for worldwide car manufacturers looking to expand into Europe and beyond.