The UK auto industry is set to utilize a new £2.5 billion ($3.2 billion) government-backed initiative aimed at building a world-leading zero-emission vehicle sector while creating thousands of new jobs.
Unveiled under Labour’s DRIVE35 program, the funding package includes £2 billion available through 2030 to support large-scale manufacturing, including gigafactories, and an additional £500 million allocated for research and development through 2035. The initiative aligns with the UK’s upcoming ban on new petrol and diesel car sales, scheduled to take effect by the end of the decade, with only zero-emission vehicles permitted from 2035.
Business and Trade Secretary Jonathan Reynolds said the funding would give British carmakers a competitive edge in the global electric vehicle (EV) market. Speaking at last month’s International Automotive Summit, Reynolds emphasized the government’s support for the sector through updated EV mandates, lower electricity costs, and trade partnerships, including a recent ‘landmark’ trade agreement with the United States.
“Economic growth is our number one priority, and by funding our world-leading auto sector, we are creating the right conditions for increased investment, bringing growth, jobs, and opportunities to every part of the UK,” Reynolds said.
The DRIVE35 program builds on the success of the Automotive Transformation Fund (ATF) and the Advanced Propulsion Center (APC) R&D competitions, which together have drawn over £6 billion in private sector investment and created thousands of jobs.
Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), welcomed the announcement, stating that the plan would encourage innovation and protect jobs amid global competition and geopolitical uncertainty.
“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,” Hawes said.
The broader funding, over £300 million, has been earmarked for specific auto manufacturers. These include more than £100 million for Astemo in Bolton and £15 million for Dana in the West Midlands to boost EV component production.
The investment was first outlined in Labour’s Modern Industrial Strategy under the Advanced Manufacturing Sector Plan, reflecting the government’s commitment to strengthening one of the UK’s most valuable industries. The automotive sector contributed £21.4 billion in gross value added to the UK economy last year and supports over 130,000 jobs nationwide.
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