The Government has put electric vehicles and batteries at the sharp end of its Modern Industrial Strategy, targeting more than 1.3 million cars and commercial vehicles a year by 2035 and a home‑grown supply chain from raw materials to recycling.
A new £2.5 billion package for the auto sector, lower industrial power prices and a £452 million battery R&D drive headline the offer to investors weighing where to build next.
At the centre is DRIVE35, a fresh industry offer worth £2 billion in capital and R&D through to 2030, with an extra £500 million to extend R&D backing. Ministers want DRIVE35 to crowd in at least £6.6 billion of private investment across vehicle electrification, software‑defined platforms and vehicle‑to‑grid technology—part of a plan to lift output above the 1.3 million mark by 2035.
The strategy also confirms reforms to the Zero Emission Vehicle (ZEV) Mandate and that full and plug‑in hybrids can be sold until 2035, easing model‑cycle planning as plants retool.
Charging and incentives get attention too. The plan cites more than 80,000 public charge points installed by June 2025, alongside £400 million to accelerate rollout and £1.4 billion to support EV uptake, including vans and HGVs. Generous capital allowances and Benefit‑in‑Kind incentives are kept in the mix to sustain fleet momentum.
On autonomy, the Government will implement the Automated Vehicles Act in full by 2027, enable commercial pilots from spring 2026, and extend Connected and Automated Mobility support with £150 million to 2030—aiming to make the UK the first European market to run self‑driving services at scale.
Rebadged as the Battery Innovation Programme, the former Faraday Battery Challenge is funded at £452 million to 2030. The programme has already backed 118 projects, the majority SME‑led, and will push next‑generation chemistries, safety and industrial skills while linking labs to factory pilots. A separate £12 million allocation via the High Value Manufacturing Catapult is scaling novel active materials and solid‑state electrolytes—a nod to supply‑chain resilience as critical minerals markets tighten.
Regulatory tailwinds are coming. From February 2027, EV and large industrial batteries sold into the EU will need a unique “battery passport”; by 2031 they must hit recycled‑content targets for lithium, nickel, cobalt and lead. The UK plans to use these EU rules as a spur—expanding reuse, second‑life and recycling, and assessing whether to adopt UK battery passports to smooth trade and traceability. (The Government’s Circular Economy Strategy proposals are due autumn 2025.)
Factory energy costs—long a drag on UK competitiveness—are directly targeted. From 2027, a new British Industrial Competitiveness Scheme will cut electricity prices by around £35–£40/MWh to 2030 for eligible electricity‑intensive manufacturers, with exemptions from key levies.
The British Industry Supercharger lifts network‑charge compensation from 60% to 90% from 2026, and the Energy Intensive Industries Compensation Scheme will continue, with a review before the UK CBAM goes live in 2027.
To speed electrification projects, a Connections Accelerator Service will prioritise strategically important sites, while the Government explores ways to scale corporate PPAs for long‑term price certainty. A revised Hydrogen Strategy lands in 2025.
Public finance is being lined up to de‑risk large EV and battery investments. UK Export Finance has £80 billion of capacity and has launched a loan guarantee for UK suppliers of critical‑minerals products going into export chains; a recent deal will unlock up to £680 million in finance for the AESC gigafactory. The National Wealth Fund brings £27.8 billion, including an intent to deploy at least £5.8 billion across gigafactories, green steel, ports and hydrogen, while the British Business Bank will provide £4 billion of Industrial Strategy Growth Capital, with the ability to write £40–£60 million equity cheques into capital‑intensive scale‑ups.
Clusters—and where the growth lands
The plan is explicit about place with pilot programmes in the North East and West Midlands which will test a fully integrated EV supply‑chain cluster model, creating a blueprint to roll out elsewhere. Each Investment Zone gets £160 million over 10 years; Freeports remain part of the toolkit. The map on page 55 sets out high‑potential regions from the North East (vehicles and batteries) to South Yorkshire (aerospace and materials). A live example: Agratas’ multibillion‑pound gigafactory in Somerset, expected to deliver up to 4,000 jobs.
By the numbers (EVs & batteries)
- >1.3m cars and commercial vehicles targeted per year by 2035.
- £2.5bn for automotive: £2bn capital/R&D to 2030 + £500m extra R&D.
- 80,000+ public charge points installed by June 2025; £400m for rollout; £1.4bn to support EV uptake.
- £452m battery R&D funding to 2030; 118 projects backed to date.
- £35–£40/MWh cut to electricity prices for eligible manufacturers from 2027.
- £80bn UKEF capacity; up to £680m finance guarantees for AESC gigafactory.
- 23–27 GW of grid‑scale storage needed by 2030.
Whitehall is offering long‑term money, cheaper power and a map of where to build. If industry brings investible projects with real supply‑chain depth, the UK has a plausible route from a handful of flagship plants to end‑to‑end EV and battery clusters with global pull. The numbers—and the timelines—now put the onus on delivery.
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UK’s EV and battery push: 1.3m vehicles a year by 2035 and cheaper power for factories