Japanese automotive giant Nissan Motor recently announced that its core subsidiary responsible for powertrain operations, JATCO (Japan Automatic Transmission Company), has officially cancelled plans to produce electric vehicle (EV) drive equipment—powertrains—at its Sunderland plant in the United Kingdom.

Tracing back to January 2025, JATCO had announced an investment of £48.7 million, planning to build an EV powertrain production line at the Sunderland factory with an annual capacity of up to 340,000 units. This production line would be responsible for manufacturing core three-in-one e-drive components integrating the motor, inverter, and reducer, regarded as a key strategic initiative for Nissan to deepen its electrification transformation in Europe and support local manufacturing in the UK.

According to the original plan, this production line was scheduled to commence operation in 2026, fully supporting multiple European-market EV models including the Nissan LEAF, thereby completing Nissan's localized vehicle and component supply chain system in Europe. The UK government had previously placed high hopes on this plan, expecting it to drive development of the local new-energy vehicle industry chain and job growth. However, merely months later, this project was completely shelved. The continued weakness in European electric vehicle market demand, with end-user sales falling far short of expectations, rendered this otherwise sound plan devoid of practical implementation value.

Weak European Demand and Nissan's Global Predicament

The immediate trigger for this withdrawal was the sluggish performance of Nissan's electric vehicles in the European market. Although the Nissan LEAF, as an early pioneer of electrification in Europe, had achieved certain success, in recent years Nissan's EV market share in Europe has faced sustained pressure amid fierce competition from Chinese brands and European local automakers. The latest report from the International Energy Agency (IEA) shows that six out of every ten electric vehicles sold globally come from Chinese manufacturers, with Chinese producers accounting for nearly 75% of global EV output, presenting severe challenges to the electrification transition of traditional European automakers.

At a deeper level, the root cause lies in Nissan's own operational difficulties. Hit hard by significant sales declines in the United States and Chinese markets, Nissan has posted massive losses for two consecutive fiscal years in FY2025 (April 2025 to March 2026). To address the crisis, Nissan announced the implementation of its global "Re:Nissan" recovery plan, explicitly reducing its number of vehicle assembly plants from 17 to 10 and conducting a comprehensive review of its global powertrain factory footprint.

Supply Chain Adjustments and Impact

With the cancellation of localized powertrain production at Sunderland, Nissan's supply chain layout in Europe will undergo significant adjustments. Currently, the Sunderland plant mainly produces the compact electric vehicle “LEAF” and plans to commence production in 2027 of the all-electric crossover SUV "Juke" targeting the European market. Core e-drive components for these models are expected to continue being supplied by Nissan's domestic factories in Japan rather than through the previously planned localized production.

This change may bring certain short-term shocks to the UK local automotive supply chain. JATCO has yet to disclose specific disposition plans for preparatory investments already made, nor has it announced alternative capacity deployment plans for the relevant e-drive systems.

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