Inside AESC's New £1bn Sustainable Transport Gigafactory
The UK Government has announced a £1bn (US$1.3bn) funding deal to build an AESC gigafactory.
Based in Sunderland, England, the facility will manufacture batteries for electric vehicles.
The National Wealth Fund and UK Export Finance will provide financial guarantees unlocking £680m (US$898m) in financing from banks including HSBC, Standard Chartered and SMBC Group.
In addition to this funding, the UK Government’s Automotive Transformation Fund is investing £150m (US$198m) in grant funding.
This follows a trade deal agreement between the US and UK that cut tariffs on cars, including EVs, from 17.5% to 10% on a quota of 100,000 UK cars.
Shoichi Matsumoto, CEO of AESC, said: “This investment marks a key milestone in AESC’s ongoing efforts to support the UK’s path towards decarbonisation and the expansion of its EV market.
“Through close collaboration with strategic partners, we strive to accelerate this transition while creating high-quality local jobs and building a resilient, sustainable supply chain.
“We are honoured to contribute to the development of low-carbon economy with our advanced battery technologies.”
Chancellor of the Exchequer, Rachel Reeves, said: “This investment in Sunderland will not only further innovation and accelerate our move to more sustainable transport, but it will also deliver much-needed high quality, well-paid jobs to the North East, putting more money in people’s pockets.”
Meet AESC
AESC is a Japanese-headquartered manufacturer of lithium ion batteries for EVs.
It was established in 2007 as a joint venture between Nissan and TOKIN Corporation.
Chinese clean energy company Envision Energy purchased part of Nissan’s stake in 2019.
AESC’s technology powers more than a million vehicles and provides more than 15GWh of installed capacity for battery energy systems in more than 60 countries.
It began operations in its Sunderland plant in 2012, the first battery factory in Europe and the only battery factory in the UK for more than a decade.
This facility has an annual capacity of 1.8 GWh and has built enough cells to power the equivalent of 250,000 EVs.
About AESC’s Sunderland gigafactory
AESC announced the construction of its second Sunderland plant, the gigafactory that has received funding, in 2021.
The new gigafactory will have an annual capacity of 15.8 GWh and employ more than 1,000 people.
AESC says that the new gigafactory will be powered by 100% carbon neutral energy.
It began construction in December 2022 with a traditional Japanese “first pillar” ceremony, where a bolt on the first pillar was tightened.
The footprint of the building will be the equivalent of 23 football pitches and use 14,000 kilometres of mains cables.
UK Business and Trade Secretary, Jonathan Reynolds, said: “We’re backing our world-class car industry, and this investment is yet another vote of confidence in the North East’s thriving auto manufacturing hub which will secure a thousand well-paid jobs and boost prosperity across the region.”
John Flint, National Wealth Fund CEO, said: “AESC’s gigafactory will not only help to retool our car industry for net zero it will also support jobs, growth and prosperity in the Northeast.”
How the gigafactory will be funded
The National Wealth Fund and UK Export Finance are set to provide financial guarantees supporting £680m (US$898m) in funding from a variety of banks.
This funding will cover the construction and operation of the gigafactory.
A further £320m (US$422m) has been secured through private financing in addition to new equity provided by AESC.
Ian Stuart, CEO at HSBC UK, said: “We’re extremely proud to have played a leading role in this complex and significant deal, including as underwriter, structuring bank and joint ECA co-ordinator.
“Once operational, the gigafactory will unlock a huge increase in the UK’s EV battery production, supporting the electrification of vehicles and the wider green transition.”
Natalie Blyth, Global Head of Sustainable Finance and Transition at HSBC, said on LinkedIn: “Fantastic to see HSBC play a lead role in the financing of AESC‘s second gigafactory in Sunderland, a landmark transaction supporting the UK’s electrification of vehicles.”
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