DRIVE35: UK launches £2.5bn plan to build a globally competitive EV supply chain

UK auto firms will benefit from a £2.5 billion commitment over the next decade that will support thousands of jobs and help ensure the UK remains at the forefront of zero-emission vehicle development.

Yesterday the Government announced the launch of DRIVE35, comprising new and improved funding competitions.

The programme will fund a wide spectrum of projects which help the transition to zero-emission vehicle manufacturing – targeting established high-volume manufacturing and multi-billion-pound gigafactories, all the way to start-ups, prototypes and cutting-edge automotive innovation.  

The new programme was announced in the Advanced Manufacturing Sector Plan, part of the UK’s modern Industrial Strategy.

It will commit two billion pounds in funding to 2030 alongside an additional 500m pounds for research and development to 2035, signalling a ten-year commitment to UK automotive innovation.

The cash will provide certainty to the sector, give innovators the confidence to invest in the UK and will support the latest in research and development, unlocking capital investment in zero emission vehicles, batteries and their supply chains. 

The automotive sector contributed £21.4 billion in GVA to the economy in 2024 and currently employs 132,000 people across all parts of the UK – including many highly-skilled, highly-paid roles, and apprenticeships.

The transition to zero emissions is the biggest opportunity of the 21st century to attract investment, harness British innovation, and deliver growth for generations to come.

The UK was also the largest EV market in Europe in 2024 and the third in the world with over 382,000 EVs sold – up a fifth on the previous year.

There are now more than 82,000 public chargepoints – with one added every half an hour – ensuring that motorists are always a short drive from a socket.

Business and Trade Secretary Jonathan Reynolds says: “We’re helping British carmakers get to the front of the pack by working hand in hand with investors to build a globally competitive electric vehicle supply chain in the UK as we deliver our Plan for Change. We’re taking action to back the industry for the future with the biggest set of announcements for the sector in the last decade.”

He continues: “This includes securing a landmark trade deal with the US to bring down tariffs for British car manufacturers, measures in our modern Industrial Strategy to lower electricity prices and updating the ZEV mandate, supporting UK manufacturers to safeguard jobs, and secure the future of the sector.”

The funding forms part of government’s bold ambition to significantly increase business investment in the advanced manufacturing sector by 2035, giving British firms an edge in the frontier industries of the future and driving growth across the country.  

DRIVE35 will build on previous successes with the Automotive Transformation Fund (ATF) and the Advanced Propulsion Centre UK (APC) R&D competitions, which between them leveraged over six billion pounds of investment from the private sector, creating thousands of jobs across the UK economy.

The Department for Business and Trade also announces over 300 million pounds for specific UK automotive manufacturing firms and projects.

This includes over 100 million pounds of capital investment for UK automotive manufacturing via the ATF, approximately 140 million pounds in combined Government and industry R&D investment, and 18 million pounds from the new 150m pounds Connected & Automated Mobility (CAM) Pathfinder programme.

With Government support, Bolton is set to benefit from over 100 million pounds in investment from Astemo Ltd., which will be vital to the production of electric vehicle (EV) components in the UK.

This investment will produce new generations of electric inverters, supporting over 220 direct high-value jobs in the region and hundreds more in the wider UK supply chain.

The West Midlands will also welcome a recent 15 million pounds investment from Dana to produce parts that are crucial for EV manufacturing.

Dana’s investment will ensure skilled jobs in the region, supporting over 100 direct jobs over the long term.    

Mike Hawes, SMMT Chief Executive states: “The creation of this dedicated automotive programme is further evidence of the sector’s importance to economic growth. Delivered as part of the Industrial Strategy, DRIVE35 has the potential to unlock investment and innovation in the UK, supporting jobs and creating wealth across the country.”

“The importance of a long term, cross-government strategy with specific measures for automotive cannot be understated given the challenges facing the sector amid geopolitical uncertainty and fierce global competition,” he adds.

Ian Constance, CEO, Advanced Propulsion Centre UK and Zenzic indicates: “This new investment underlines the commitment from Government to secure advanced manufacturing in the UK. I am pleased that the APC, Zenzic, and its delivery partners are here to facilitate a new wave of funding in the automotive industry, supporting innovation, driving scale-up, and enabling transformation.”

Thanks to the wide range of eligible technologies under the new competitions, DRIVE35 funding will benefit UK auto businesses of all sizes and maturities, from small-scale innovators to large-scale established global companies.

Through targeted investment for successful project applicants, the programme will create tens of thousands of new jobs, stimulate billions in economic growth and investment, and cut millions of tonnes CO2 emissions.

The programme will provide a more impactful offering for investors across three streamlined pillars: Transformation, Scale Up and Innovation. Tomorrow the government will open the following competitions across the DRIVE35 programme:

• Automotive Transformation Fund: A new and improved capital funding offer under DRIVE35’s keystone Transformation pillar, supporting large-scale capital investments in the UK, and now with a widened technology scope.
• Scale Up Feasibility Studies: R&D funding to support businesses with strategic thinking on opportunities to scale, creating a pipeline of exciting decision-ready auto projects for UK investment.
• Innovation competitions: Through DRIVE35’s Collaborate and Demonstrate streams, we will build on over a decade of success to support both early-stage and late-stage R&D projects involving innovative technologies and processes.

DRIVE35 will continue the successes of the UK’s world-leading achievements in R&D.

As an example, this government has recently committed a combined 70 million pounds of R&D grant funding for over 50 innovative automotive projects. 

The programme will be delivered by DBT in partnership with APC UK and Innovate UK.

Combined with industry funding, this totals 140 million pounds in new investment for UK R&D.

These projects will support technologies including batteries, energy storage, lightweighting and power electronics.

Successful applicants include Mercedes and JLR.  

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