Car giant Nissan has confirmed in a letter to workers that the next-generation X-Trail, planned for its Sunderland plant, will instead be made in Japan.
The decision is another huge blow to the UK's car industry which has been warning for years about the impact of Brexit uncertainty on top of other problems such as a slump in diesel sales.
Nissan chairman Gianluca de Ficchy said in the letter that much had changed since the Japanese firm announced plans to build a new Qashqai and X-Trail in the UK in October 2016.
"At that time they were both planned as 'traditional' models, powered by internal combustion engines. X-Trail was already going to be made in Kyushu, but there was a good business case for bringing production to Europe as well.
"Since that time, as you know, the environment for the car industry in Europe has changed dramatically. To meet the changing emissions regulations we've had to invest much more in new powertrains for our future models like X-Trail. At the same time, the volume forecasts for X-Trail in Europe have reduced.
"For those reasons the company has decided to optimise our investments and concentrate production in Kyushu, instead of adding another production site. For the European business, this does not change the fact that X-Trail is - and will continue to be - a crucial model for us.
"Today's announcement will be interpreted by a lot of people as a decision related to Brexit. We have taken this decision for the business reasons I've explained, but clearly the uncertainty around the UK's future relationship with the EU is not helping companies like ours to plan for the future."