UK Government to Infuse £2.5 Billion in Automotive Sector Throughout the Next Decade

The UK government has launched a new initiative, DRIVE35, to support the country's automotive manufacturing and research and development (R&D) capabilities. This programme is part of the Advanced Manufacturing Sector plan, which falls under the wider Industrial Strategy.

DRIVE35 aims to encourage further growth in the automotive industry, particularly in the electric vehicle (EV) and battery supply chain. The EV and battery supply chain is undergoing increased levels of localisation across Europe, and the UK is not an exception.

Increased volatility in global trade has prompted players across the industry to invest in localising production. DHL and Cox Automotive, for instance, launched the UK's largest battery services centre earlier this year, focused on repair and end-of-life services for EV batteries.

JLR, an Original Equipment Manufacturer (OEM), has taken steps to reinforce sustainable sourcing throughout its electric supply chain. Alison Nuttall, head of sustainability global affairs at JLR, commented that there has been "really great progress" towards the automaker's goal of overall net zero carbon emissions by 2039.

Astemo, a tier-1 supplier focused on inverters, announced a £100m ($133.9m) investment, with government support, into its Bolton factory. Similarly, AESC announced a £1 billion ($1.3 billion) investment towards the building of a gigafactory in Sunderland. Dana, an electric drivetrain manufacturer, invested £15m ($20m) into its West Midlands plant.

The measures outlined in DRIVE35 could help encourage OEMs and tier suppliers to locate their regional manufacturing efforts in the UK. More regional sourcing and manufacturing can help reduce susceptibility to disruptions and increase efficiency through shorter transportation routes.

The initiative also targets funding at projects that facilitate zero emissions vehicle manufacturing, including support for gigafactories and high-volume manufacturing lines, as well as start-up or prototype projects. A total of £2 billion ($2.68 billion) has been allocated to the sector until 2030 for funding competitions and grants.

Additionally, the UK government has placed an increased emphasis on the continued decarbonisation and electrification of the UK auto sector through DRIVE35, despite relaxing its Zero Emissions Vehicle (ZEV) mandate following industry pressure.

As of 2024, the UK was the largest European market for EVs, with a total of 382,000 units sold. Currently, there are 89,000 public charging points across the UK. The automotive industry contributed £21.4 billion ($28.7 billion) in gross value added (GVA) to the UK economy and employed 132,000 people in 2024.

However, it's important to note that the search results do not provide specific information about which companies received support under the DRIVE35 program in the United Kingdom. Nonetheless, the initiative presents a significant opportunity for the UK to bolster its position in the global EV market.

UK Government to Infuse £2.5 Billion in Automotive Sector Throughout the Next Decade