Nissan will not invest further in its Sunderland plant until it reaches a deal with the UK government to receive compensation for the additional costs and taxes it might incur as a result of Brexit.

Speaking at the Paris Motor Show, Nissan boss Carlos Ghosn said: "If I need to make an investment in the next few months and I can’t wait until the end of Brexit, then I have to make a deal with the UK government. If there are tax barriers being established on cars, you have to have a commitment for carmakers who export to Europe that there is some kind of compensation."

Crucially, Ghosn isn't yet threatening to pull a car from production in Sunderland, but does want compensation if the UK leaves the EU single market and the EU imposes tariffs on exported cars from the UK to the EU as a result.

Compensation is possible: the UK could – because it will no longer be restricted by EU law – reduce corporation tax for UK car makers or engineer some tax break deals on research and development. It’s thought that Ghosn made his announcement because he is aware of that fact.

Ghosn’s announcement confirms a previous story where he warned of grave implications for the plant in the event of a Brexit vote. Nissan has invested heavily in the plant in the past. 

Such a move would be a blow to the UK’s car industry, because the plant accounts for a third of all Britain’s car exports, as well as one of the UK’s most prolific domestically-built models, the Qashqai. 

Nissan's European boss Paul Willcox recently said that the Qashqai is moving to ‘Line 2’, which will allow the Sunderland plant to build more examples of the SUV model. Sunderland also builds around 20,000 Leaf EVs each year, as well as the Infiniti Q30. The plant built 120,000 Jukes in 2014 and 110,000 in 2015.

Additional reporting by Hilton Holloway 

Read more: The SMMT has issued a post-Brexit warning about the risk posed to the UK car industry