Nissan said it will consolidate production of the next generation X-Trail at its plant in Kyushu, Japan, where the model is now produced, allowing the company to reduce investment costs in the early stages of the project.
"While we have taken this decision for business reasons, the continued uncertainty around the UK's future relationship with the European Union is not helping companies like ours to plan for the future", said Nissan Europe Chairman Gianluca de Ficchy.
Ministers strongly denied any financial incentives were offered.
The comments came from Shadow Business Secretary Rebecca Long-Bailey, after the car-maker confirmed it has done a U-turn on a previous pledge to make the SUV in the UK.
But according to Sky News, Nissan's impending announcement is not expected to have a major impact on jobs.
Local MP Bridget Phillipson, tweeted that the reports "represent deeply troubling news for the north east economy - So many jobs and livelihoods depend on Nissan's success".
Around 6700 people work at Nissan in Sunderland and it employs thousands more in the supply chain. I will be asking for the government to intervene, and will stay in close contact with the company itself, ' she said.
Other future models planned for Nissan Sunderland Plant are unaffected, including next-generation Juke and Qashqai.
There had been concerns that Nissan - part-owned by France's Renault - could move production to France in future to avoid any post-Brexit EU tariffs.
A report by the Society of Motor Manufacturers and Traders (SMMT) said investment had effectively "stalled" amidst fears over the UK's future trading with the EU.
The group's chief executive, Mike Hawes, described the threat of a no-deal Brexit as "catastrophic".
Sky News reported that a letter from the management to Sunderland's 7,000 factory staff said that the announcement would be "interpreted by a lot of people as a decision related to Brexit" and that "uncertainty around the U.K.'s future relationship with the European Union is not helping companies like ours to plan for the future". Ford announced on Friday it was cutting 400 jobs at its engine plant in Bridgend, South Wales.
It followed a similar move by Jaguar Land Rover to reduce its 44,000 workforce by 4,500 under plans to make £2.5 billion of cost savings. "Our workforce in Sunderland has our full confidence, and will continue to benefit from the investment planned for Juke and Qashqai".
Investment in Britain's auto industry halved a year ago, data showed last Thursday, and vehicle production by Nissan in Britain fell by more than 10 per cent.
Last year Nissan cut hundreds of jobs at the Sunderland factory in response to declining demand for diesel models.