The UK government has announced a £1 billion investment package to establish a gigafactory in Sunderland that will support 1 000 jobs and manufacture batteries for up to 100 000 electric vehicles annually. The facility, to be operated by AESC, will increase the nation’s current EV battery capacity sixfold.
In the transaction, the National Wealth Fund and UK Export Finance (UKEF) will provide guarantees unlocking £680 million in bank financing from Standard Chartered, HSBC, SMBC Group, Société Générale, and BBVA. AESC has arranged the remaining £320 million in private financing, including new equity. The government’s Automotive Transformation Fund will contribute an additional £150 million in grants.
This project forms part of the government’s Plan for Change, which aims to strengthen industrial regions, accelerate the shift to clean energy, and create high-skilled employment. It follows a recent economic agreement with the US that reduces car export tariffs from 27.5% to 10% on a quota of 100 000 vehicles, designed to boost UK exports and safeguard domestic jobs.
Chancellor of the Exchequer Rachel Reeves said the investment would drive innovation, support sustainable transport, and deliver well-paid roles in the North East. Business and Trade Secretary Jonathan Reynolds described the gigafactory as a vote of confidence in the region’s automotive sector and a catalyst for future growth.
AESC CEO Shoichi Matsumoto highlighted the company’s commitment to supporting the UK’s decarbonisation efforts and building a resilient local supply chain. National Wealth Fund CEO John Flint noted NWF’s role in mobilising private capital for net-zero projects, while UKEF CEO Tim Reid emphasised the importance of export financing in strengthening British manufacturing and local economies.
To date, the Automotive Transformation Fund and the Advanced Propulsion Centre have leveraged over £6 billion in private-sector investment. Last year’s Autumn Budget also allocated more than £2 billion for zero-emission vehicle manufacturing and related research and development over five years, reinforcing the UK’s automotive strategy.
Source: HM Treasury
