UK’s largest EV battery plant puts expansion on hold as JLR deal hits a wall

The UK’s biggest gigafactory has paused plans to grow its Sunderland site after talks with Jaguar Land Rover over a battery supply deal broke down, according to sources familiar with the matter.

AESC, the Chinese-owned company that makes batteries for Nissan next to its Sunderland plant, has delayed its ramp-up due to weaker-than-expected demand from Nissan and the lack of an agreement with JLR. The setback adds to signs that the shift from petrol and diesel to electric cars is slowing.

On Friday, Andy Burnham’s Labour government suggested it could cut UK electric car sales targets further, potentially hurting the EV supply chain.

Battery makers across the UK and Europe have struggled as carmakers retreat from earlier electrification goals. Several major European battery projects have gone bankrupt, while others have scaled back in an industry led by Chinese firms like CATL and BYD.

JLR’s sister company, Agratas, is building its own gigafactory in Somerset, but that plant isn’t due to start until 2027 and has faced construction issues that could delay it further. JLR was close to a supply deal with AESC last year but has since reached agreements with other suppliers.

The failure to secure JLR has meant AESC has held off installing a third manufacturing line at Sunderland.

Sources say talks stalled because JLR was unwilling to make formal financial commitments, with disputes over cost and timing also cited. AESC still plans two more lines for Nissan, but Nissan has slowed its EV shift as it shuts factories and cuts jobs. Some insiders worry about Nissan’s future demand, and while Chery could source batteries from AESC, no deal has been finalised.

The uncertainty reflects a broader industry mood shift. Carmakers have scaled back rapid electrification as demand lagged and some governments, notably the US under Donald Trump, turned against EVs. High interest rates and the slowdown have been fatal for some European battery makers, including Northvolt and Britishvolt, while others have cancelled plans.

8 GWh of annual capacity. 8 GWh, enough for about 300,000 cars. Its French plant is performing well thanks to the Renault 5, but a Spanish factory has been delayed. AESC secured a £1bn refinancing last year, including UK government money, and remains confident in long-term battery demand.

Plans for a microgrid beside the Sunderland factory are also in doubt. AESC, Chery, and JLR declined to comment.