Nissan has told staff in Sunderland the company will not make the new X-Trail there, as previously planned.
Today, Nissan's Europe division boss wrote to Sunderland factory staff confirming the news and telling them the model will continue to be made in Japan.
Gianluca de Ficchy said the decision was a mixture of investment needed for emissions regulations and reduced sales forecasts but added uncertainty over Brexit had also played a part.
He said the announcement would be "interpreted by a lot of people as a decision related to Brexit" and that "uncertainty around the UK's future relationship with the EU is not helping companies like ours to plan for the future".
He added: "With (Other OTC: WWTH - news) the UK's departure from the EU on 29 March getting closer every week, we have a taskforce in place, reporting to me, that it is considering all of the possible scenarios and the potential impact on business.
"We appreciate this will be disappointing for our UK team and partners. Our workforce in Sunderland has our full confidence, and will continue to benefit from the investment planned for Juke and Qashqai."
Sky News reporter Becky Johnson, who is in Sunderland, said: "The main sentiment that I'm feeling from people I'm speaking to here is one of defiance.
"You have to remember that in the referendum almost two-thirds of people here voted to leave the EU.
"I've spoken to one man, whose two adult children in their 20s both work at Nissan, and he said to me 'let Nissan leave Sunderland, we will be okay, we will find something else'.
"Others say Brexit is being used as an excuse by businesses - that is what people think."
Becky Johnson also spoke to a man who supplies parts to Nissan, who voted Remain. She (Munich: SOQ.MU - news) said: "It was always his fear… that (Brexit) would ultimately lead to businesses like Nissan pulling out of the UK. So a real split of views here in Sunderland."
Business Secretary Greg Clark said: "Nissan's announcement is a blow to the sector and the region, as this was to be a further significant expansion of the site and the workforce.
"The company has confirmed that no jobs will be lost. They have reiterated today their commitment to the UK by continuing to manufacture in Sunderland the current Qashqai, Leaf and Juke models and the new Qashqai model from 2020.
"The UK automotive industry is a vital sector for the British economy which draws on our combination of rich automotive heritage and cutting edge innovation.
"Its role in providing high skilled well paid jobs, innovative R&D and investment is why we are determined to build on these strengths to make the UK a leader in the next generation of autonomous and electric vehicles through the Automotive Sector Deal, as part of our modern Industrial Strategy."
The company had pledged to manufacture the new SUV model in the UK four months after the 2016 referendum - a move seen as a major vote of confidence in the country's manufacturing outside the EU.
The news casts doubt over Nissan's future investment in the UK, and stokes debate about the future of British car manufacturing less than eight weeks before the UK is scheduled to leave the EU
Many Remain supporters said the withdrawal was a worrying indicator of Brexit having a corrosive impact on the British economy.
Labour leader Jeremy Corbyn tweeted: "The Conservatives' botched negotiations and threat of a no deal Brexit is causing uncertainty and damaging Britain's economy."
Liberal Democrat leader Sir Vince Cable said it could be a turning point in Brexit uncertainty, and said it showed that big companies were "very seriously reconsidering their future here".
Sir Vince added: "The whole industry is rethinking its approach because it originally saw Britain as a gateway to Europe and that gateway is now closing.
"I think Brexit is a major factor, it may be one of several. Not just for Nissan but the same calculations are being made throughout the car industry."
Shadow Brexit secretary Sir Keir Starmer said the withdrawal, if confirmed, "represents a serious blow to the communities that depend on the jobs Nissan creates and supports".
He said the Conservatives' "chaotic handling" of negotiations was having a "devastating impact on business investment".
Julie Elliot, Labour MP for Sunderland, said she would ask the government to intervene to protect jobs in the city.
"But we cannot deny the inevitable role that Brexit plays," she continued. "The constant uncertainty, the chaotic government. None of it is conducive to encouraging business investment in this country."
Conservative pro-Remain MP Anna Soubry said it was "difficult not to be angry" that the manufacturer may pull production.
Unite's assistant general secretary for manufacturing, Steve Turner, said it was "beyond disappointing" that Unite members heard about their futures and the holding back of planned Sunderland investments through the media and not directly from the company.
"These rumours are disturbing and will cause the workforce to have a very anxious weekend even though production of the X-Trail would have necessitated additional jobs on site," he said.
In the 2016 referendum, Sunderland voted 61.3% to leave the EU.
International Trade Secretary Dr Liam Fox said there was "increasing worry" about the European and global economy.
He told Sky News' Sophy Ridge on Sunday: "We've seen a big slowdown in China, it's had a knock-on effect.
"We've seen Italy now go into recession, we've seen the German economy slow down, we've seen the French economy slow down. Really we do need to avoid any disruption to that European trading system."
Nissan employs about 7,000 people in Sunderland, and was thrust into the heart of the Brexit debate in 2016 when it received a letter from government ministers offering undisclosed reassurances about the company's future competitiveness.
Four months after the referendum, the Japanese car maker said it would build its next-generation Qashqai sports utility vehicle and a new X-Trail model in Sunderland.
The X-Trail is currently produced exclusively in Japan.