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Motoring news

Spending review may affect Nissan's Leaf electric car

26/05/2010

A £20.7 million loan pledged to support the development of a mainstream electric car is thought to be under review, as the Government examines how to cut £6.2 billion from its budget.

And, in a further blow to the Nissan Leaf's prospects, the public cost-cutting drive may also lead to the £5,000 consumer discount on electric cars being scrapped - potentially raising the car's price to £28,350.

The loan was agreed by the former Labour administration to part-fund the building of the 'world's first' zero-emissions car at Nissan's Sunderland plant. It followed a £420 million investment by the Japanese car maker in its UK operations.

A Nissan spokesperson bullishly told Autocar: "The Government is reviewing the loan, but as far as we're concerned we signed an agreement with BIS [Department for Business, Innovation and Skills] that we believe is binding."

However, according to a report in the Telegraph, the Treasury may opt to end some existing agreements and pay a termination fee where continuing would represent poor long-term value, or would be inconsistent with the coalition Government's priorities.

"The new Government has said it's committed to a green economy and zero-emission motoring is part of this," Nissan's spokesperson added.

"We'll have to wait and see."

Under Labour, the North East was designated last summer as the UK's first "low-carbon economic area", specialising in ultra-low carbon vehicles. Nissan says that production of the Golf-sized electric car will create 550 jobs in the Sunderland, where it hopes to produce 50,000 examples a year.

Quoted in the Guardian, Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, said: "We fully understand why the new Government wants to validate spending decisions which were made in the recent past.

"But we believe that these expenditures which are going to be supporting the UK motor industry are consistent with the Government's priorities and represent value for money."

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