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The automotive sector is one of the largest manufacturing sectors in the UK. In 2024, the motor vehicle manufacturing industry contributed £21 billion to the economy, 0.9% of all UK economic output.
A growing share of this output comes from electric vehicles: in 2024, they accounted for 35% of all cars built in the UK (including hybrids), up sharply from just 6% in 2017. This shift showcases the impact of decisive government policy and market dynamics, such as technological innovation and consumer demand.
A sector in transition
A key catalyst is the Zero Emission Vehicle (ZEV) mandate, introduced in January 2024. This mandate aims to stimulate UK vehicle manufacturers to sell more electric vehicles by stipulating a minimum percentage of car sales that must be zero-emission vehicles each year, rising from 22% in 2024 to 80% by 2030 and 100% in 2035. Alongside this regulatory push, rapid advances in electrification and battery technologies are reshaping the sector. At the same time, rising demand for sustainable manufacturing and the emergence of connected and autonomous vehicles are redefining how cars are designed, produced, and maintained.
These drivers present both opportunities and challenges: while they open new market avenues, they also require unprecedented levels of investment. For instance, early-stage R&D may require hundreds of thousands of pounds, scaling up pilot production facilities can demand several millions, and full commercial projects such as giga factories or large-scale infrastructure often involve multi-million-pound commitments.
Funding opportunities for UK automotive businesses
In July 2025, as part of the UK’s modern Industrial Strategy, the UK Government launched DRIVE35 (Driving Research and Investment in Vehicle Electrification) — a landmark grant funding programme led by the Department for Business & Trade and delivered by the Advanced Propulsion Centre (APC).
£2 billion has been allocated to the sector until 2030 for funding competitions, and a further £500m has been earmarked for R&D investment in the second five years. This sustained injection of capital aims to safeguard and create thousands of jobs, strengthen the UK’s competitive position in zero-emission vehicle development, and accelerate the transition to clean manufacturing.
DRIVE35 will support companies of all sizes and maturities involved in the zero-emission vehicle supply chain, from global OEMs and tier-one suppliers to innovative UK start-ups, scale-ups, and deep-tech innovators with automotive applications. Eligible technologies include electric powertrains and drivelines, battery systems, hydrogen fuel cells, energy storage systems, fuel cell systems, lightweight and advanced materials, software, and digital electronics.
The programme delivers funding through three streamlined pillars:
Innovation
Grants ranging from a few hundred thousand pounds to £25 million per project, supporting SME growth and late-stage R&D projects:
- Mobilise (TRL 3-5, grants up to ): for SMEs, start-ups, spinouts and more mature companies, developing early-stage zero-emission automotive and Connected & Automated Mobility technologies, products and services.
- Demonstrate (TRL 5-6, grants up to £1.5 million): for SMEs building product or process demonstrators to validate early-stage technologies.
- Collaborate (TRL7-8, grants up to £25 million): for SMEs collaborating with consortium partners to design, develop and deliver late-stage zero-emission vehicle technologies.
Scale-up
Grants ranging from £750,000 to several million pounds per project, supporting the acceleration of the scale-up of pioneering technologies and achieving targeted production volumes faster:
- Feasibility Studies (TRL 6-7, grants up to £750,000): for businesses seeking to develop a decision-ready business case for a manufacturing project at pilot, demonstration or full industrial scale, including performance evaluation and commercial validation.
- Scale-up Fund (TRL 7-8): advancing from feasibility to rapid scale-up, enabling manufacturing facility build-out or pilot/demonstration-scale process development for commercialisation.
Transformation
Multi-million-pound grants through the Automotive Transformation Fund (ATF), driving large-scale capital investment to industrialise zero-emission vehicle technologies at full commercial scale (TRL 8-9).
Funding the road ahead
The UK automotive sector stands at a critical juncture — propelled by regulation, technological innovation and consumer demand, yet challenged by the scale of investment required to deliver on its zero-emission ambitions. While early-stage R&D may run into hundreds of thousands of pounds, scaling pilot facilities quickly climbs into the tens of millions, and large-scale infrastructure demands multi-million-pound commitments.
Successfully navigating this highly competitive landscape demands not only technical innovation but also strategic funding alignment, ensuring the right mix of grants, private capital, and collaborative partnerships at each stage of development.
Our Expertise
At Ayming, we specialise in bridging that gap; helping businesses identify the most suitable funding opportunities and craft winning applications that maximise success rates. Whether you are an emerging innovator or an established manufacturer, our expertise can accelerate your journey from concept to commercial reality. Now is the time to secure the funding that will drive your next phase of growth — and we are ready to help you make it happen.
