Nissan Decides to Build New Leaf Model in UK Despite Risks of Losing EV Tax Credit

Dec 05, 2023 03:38 AM EST

WHITE NISSAN CAR — (Photo : PEXELS/Albin Berlin )

Nissan has made a significant decision regarding the production of the next-generation LEAF electric vehicle (EV). Despite the risks associated with potentially losing eligibility for the EV tax credit, Nissan has chosen to build the new LEAF model in the UK at its Sunderland factory.

The Major Decision, Risks Losing EV Tax Credit

This announcement coincides with Nissan's plans to introduce two new electric SUVs, the Juke and Qashqai, which are among the brand's top-selling SUVs in Europe. The investment for these three new EVs at the Sunderland plant amounts to a substantial £3 billion ($3.8 billion).

According to Electrek, while the LEAF was once a pioneering force as one of the earliest mass-market EVs, it has faced tough competition from more technologically advanced electric vehicles. The decline in LEAF sales is evident in major markets, including the US (-37%), Europe (-28%), and Japan (-15%) through September this year.

The next-generation LEAF, set to launch by the end of the following year, will mark the beginning of the trio of new EVs manufactured at the Sunderland factory. Surprisingly, Nissan does not intend to produce the new LEAF in the United States, where the model initially started its electric journey.

This strategic decision to build the next-gen LEAF in the UK as a crossover coupe SUV signals Nissan's efforts to stay competitive in the evolving EV market. The move is part of a larger transformation plan, as Nissan aims to revamp the LEAF and continue its legacy as an affordable EV option.

As reported in ViewusGlobal, because Nissan has opted to manufacture the next batches of the LEAF in the United Kingdom, it will no longer qualify for the Individual Retirement Account (IRA) tax credit in the US market. Previously, as a Japanese vehicle, the LEAF was the first to be eligible for a $3,750 deduction for the current models until the end of this year, which commenced last autumn.

Moreover, the report also shared Nissan's strategy for the upcoming LEAF generation involves a transformation into a crossover coupe SUV. This shift is evident with their introduction of a concept car named "Chill-Out," which shares the same CMF-EV platform as the Ariya.

The vehicle will incorporate the e-4ORCE electric 4WD control system and utilize a fifth-generation battery boasting a 30% increase in energy density compared to the current 62kWh pack. As a result, the LEAF's driving range has been extended to 385km (approximately 239 miles), a range similar to the Volkswagen ID.3 equipped with a 77kWh battery, providing 343 miles of range.

However, it's important to note that if the LEAF is not manufactured in the United States, it will lose eligibility for a tax deduction, which could put it at a disadvantage in terms of competitiveness, especially in the market for budget-friendly models.

Nissan's Sunderland Factory

The Guardian reported, Nissan is investing £2 billion in its Sunderland plant to produce three new electric car models, replacing its existing Qashqai, Juke, and the iconic Leaf. This move solidifies Sunderland's status as the UK's largest electric car factory and secures the future of its 6,000 employees. A third battery "gigafactory" is also in the works, potentially built by AESC, to support this expansion.

While specific government subsidies weren't disclosed, discussions for support in exchange for UK-based battery production are ongoing. The investment reflects confidence in the UK's automotive industry, following challenges related to Brexit and semiconductor shortages.