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DRIVE35: £2.5bn Funding Boost to Power the Future of UK Automotive
The UK has always been recognised for its prowess in automotive manufacturing, with legacy brands such as the British Motor Corporation and Rover spearheading the traditional industry into modern times, and the common household names of today such as Rolls-Royce, Aston Martin and JLR continuing to carry the flag. British auto manufacturing has always been known for its ability to produce luxury, high-performance vehicles with strong ties to British heritage and design elegance, but new pressures on the global scale are putting this historical dominance into question. Automotive manufacturers across the world are now beginning to develop and push the boundaries of what is possible in areas such as EV development, in-car technology and component manufacture (UN Trade and Development, 2024), which has transformed the global market in a variety of ways.
The automotive sector contributed £21.4 billion in Gross Value Added (GVA) to the UK economy in 2024 and employs around 132,000 people across the UK; many of which are high-skilled, high-paying jobs and apprenticeships, signifying the importance of this sector within the UK economy. Focusing on EVs, the UK was the largest EV market in Europe in 2024, securing its place as the third largest in the world with 382,000 vehicles sold, representing an increase of 20% from 2023 (GOV UK, 2026). Although EV sales are relatively strong within the UK, the general production of cars recently reached its lowest level in seven decades (excluding the COVID-19 isolation period). There are numerous factors influencing this, primarily the general uncertainty in the industry regarding the mechanics of shifting from traditional combustion engines towards heavy EV production – many firms had to downsize their production operations to make the switch in process, plant & machinery (The Guardian/SMMT, 2025).
The introduction of EVs within the marketplace has fostered significant change in a short period of time, and whilst the production of EVs is one aspect to consider, we must also consider the adoption of this new technology in the various consumer segments across the globe. S&P Global (2025) identify that consumer readiness to adopt EVs varies significantly between North America, Europe and Greater China. This fragmented adoption across regions poses even more challenges for auto manufacturers, as they are having to balance these unique local factors alongside the broadening of product portfolios to include internal combustion engine (ICE), hybrid and battery electric vehicles (BEVs). This ultimately increases costs and the requirement for strategic effectiveness to cater to the different electrification levels and global preferences currently sought in the market.
There have already been signs of major foreign investment in British EV manufacturing, which aids further weight to the conversation. British automotive giant McLaren Automotive is currently in the process of merging with EV start-up, Forseven, with backing from the major Abu Dhabi-based investment firm CYVN Holdings – this is just one type of investment that the industry has seen already.
At what could be one of the most pivotal points in the history of UK automotive, the UK government has just announced the new DRIVE35 funding scheme, which centres around supporting the sector’s transition to zero-emission vehicle manufacturing. The scheme will provide £2.5billion in funding over a ten-year period, spread across the entire industry from high-volume manufacturers all the way to innovative start-ups – this will be split between £2billion in general funding up to 2030, with an additional £500 million for R&D to 2035.
DRIVE35 represents the crucial investment required to provide stabilisation and certainty to the industry in a period of rapid global development and competition. The DRIVE35 scheme aims at achieving the following:
- Encourage inward investment through providing the leverage that UK automotive needs to stay at the forefront of the market.
- Strengthen supply chains across the board.
- Promote economic activity within the 3 key funding areas: Transformation, Scaling-Up and Innovation.
Funding is already on track for release across three key themes: Zero-Emission Vehicle Technologies, Manufacturing Competitiveness and Software Defined Vehicles (SDV) / Electronic & Electrical Architectures (E/E). Within these key themes, the focus is heavily applied to product and process innovations contributing toward zero-emissions, R&D to improve efficiency, productivity and cost-competitiveness, alongside cutting-edge software and architecture.
It will be vital for British firms to capitalise on this funding as it is released, to allow for the rightful development and continued success of the industry. @IMIG UK are already working on developing a methodology and process to assist companies looking to capitalise on the opportunity, so if this funding could help execute your strategy, then we would love to have a discussion with you! We will help you by leading the application process and working with you to optimally deploy the funding through our project management expertise.
Evidently, we are in the early days of this topic, so please reach out if you would like to get the conversation going early and stay ahead of the game. Let’s work together to ensure the rightful continuity of British automotive prestige!
References:
UN Trade and Development, 2024
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