Chinese automaker Chery has reached an agreement to manufacture electric vehicles at Nissan’s production facility in Sunderland, England. This partnership allows Chery to circumvent European Union import tariffs on Chinese-made EVs while providing Nissan with a strategy to boost capacity utilization at its underperforming British plant, according to reports from TV 2.
Why is Nissan opening its doors to a Chinese competitor?
Nissan is grappling with significant overcapacity at its Sunderland factory, which has reportedly been operating at roughly 50 percent of its total production capacity. By bringing in Chery—which manages brands like Omoda, Jaecoo, and Exlantix—Nissan aims to secure new revenue streams and improve operational efficiency. According to the reporting, Nissan’s current production output, which includes the Leaf electric model, is insufficient to maximize the facility’s economic potential.
The Jaecoo J7, a SUV produced by a Chery subsidiary, has emerged as a top-selling model in the United Kingdom so far this year, making local production a strategic logistical advantage for the brand.
How does this partnership help Chery avoid EU tariffs?
The European Union has implemented strict tariffs on vehicles imported from China to protect local manufacturers. By shifting assembly to a pre-existing European facility, Chery avoids these levies while gaining immediate access to the market. Unlike competitors that are building new plants from the ground up, Chery’s approach reduces capital expenditure and increases speed to market. This strategy contrasts with firms like BYD, which recently completed a new factory in Hungary, and SAIC, which is investing billions in a new production hub in Spain.
What are the long-term trends for Chinese automotive manufacturing in Europe?
The automotive industry is shifting toward a “local production” model to navigate geopolitical trade barriers. While established European manufacturers have historically resisted collaboration with Chinese entrants, the current economic climate—defined by low factory utilization and intense price competition—is forcing a tactical pivot. Analysts note that while outsourcing production to Nissan offers a short-term fix for Chery, the broader trend remains a push for dedicated, large-scale manufacturing hubs within Europe to insulate brands from fluctuating trade policy.
Frequently Asked Questions
- Why not just build a new factory? Building a new site requires massive capital and time. Utilizing Nissan’s existing, under-capacity plant provides immediate, flexible production capabilities.
- Which brands will be produced in Sunderland? The agreement focuses on Chery-owned brands, including Omoda, Jaecoo, and Exlantix.
- How does this affect the price of EVs? Manufacturing locally allows brands to avoid import tariffs, which helps keep retail prices more competitive for European consumers.
Keep an eye on regional trade regulations. As more Chinese manufacturers move assembly into the EU and UK, the definition of “locally produced” may come under increased scrutiny from regulators.
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