Car giant Nissan 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.
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"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."
The letter continued: "With the UK's departure from the EU on March 29 getting closer every week, we have a taskforce in place, reporting to me, that is considering all of the possible scenarios and the potential impact on the business.
"As a responsible business with 16,000 employees in the region, I want you to know that we are preparing across all functions, and with our supply chain, for anything that might impact our current business model. When the time comes to initiate any of those plans, we will be ready, and we will communicate with full transparency to all of you."
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Nissan was still investing heavily in the new Juke model and the next-generation Qashqai, said Mr de Ficchy.
"Since they were originally allocated, those two models have also needed a lot of additional investment to meet the new emissions regulations and to electrify their powertrains.
"To support this we are taking advantage of our global assets, and with X-Trail already manufactured in Japan, we can reduce our upfront investment costs.
"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."
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The Sunderland plant, which opened in 1986, employs 7,000 workers, producing around 2,000 cars a day. Other Nissan models built at the site include the Qashqai, Juke, Q30, Note and the zero-emission electric Leaf.
The decision follows figures last week showing car production slumped by almost a 10th last year, leaving the industry on "red alert" amid continued Brexit uncertainty.