Innovate UK launches £5m DRIVE35 competition for EV manufacturing startups
This article covers Innovate UK, a government body, launching the DRIVE35 Scale Up: Feasibility Studies competition to fund feasibility work intended to unlock UK manufacturing for zero emission vehicle technologies. The programme aims to support UK-based startups, SMEs and larger manufacturers by funding investment-ready business and commercialisation plans for batteries, electric drivetrains, fuel cells and related supply-chain capabilities.
Innovate UK, working with the Department for Business and Trade and the Advanced Propulsion Centre UK, has launched the DRIVE35 Scale Up: Feasibility Studies competition to back feasibility work that could unlock UK manufacturing for zero emission vehicle technologies. The programme targets detailed business and investment cases for UK-based pilot, demonstration or industrial scale production of batteries, driveline systems, fuel cells and related supply-chain capabilities — an area policymakers and industry see as central to the country’s automotive transition.
Why it matters
The UK government has repeatedly flagged domestic manufacturing and battery sovereignty as strategic priorities. DRIVE35 aims to convert that rhetoric into investable projects by funding the planning work that typically precedes capital investment: manufacturing layouts, cost models, commercialisation routes and investor-ready business cases.
If the competition works as intended, it could accelerate private finance into UK factories for electric machines, power electronics, batteries and associated upstream supply chains — and in doing so help preserve and create higher-value manufacturing roles in the automotive sector.
What the competition offers
Innovate UK says it will work with the Department for Business and Trade (DBT) and the Advanced Propulsion Centre UK (APC) to invest up to £5 million in the DRIVE35 Scale Up competition, subject to sufficient high-quality applications. The competition brief also states that a minimum of £5 million has been allocated, reflecting some internal variation in wording in the announcement.
Key financial parameters:
- Grant size per project: between £150,000 and £750,000.
- Project duration: up to nine months. Projects must start no later than 1 May 2026 and must finish by 31 January 2027.
- Funding intensity: up to 60% of eligible costs for SMEs and up to 50% for large organisations.
- Maximum cumulative subsidy per enterprise under this route: £3 million (cumulation rules apply over a three year rolling period).
- APC industrial contribution: a 3.5% fee payable on each grant awarded.
All funded activity must be carried out in the UK and exploitation of results is expected to be from the UK.
Who is behind the fund
The competition is part of a Department for Business and Trade led DRIVE35 programme — Driving Research and Investment in Vehicle Electrification — with delivery through Innovate UK, which sits within UK Research and Innovation (UKRI). The Advanced Propulsion Centre UK will play a partner role and levy the stated industrial contribution on grantees.
The initiative is framed as part of the UK’s longer-term Industrial Strategy and the Automotive Council’s roadmaps, signalling close alignment with government automotive priorities.
What projects will be prioritised
The programme targets feasibility studies that develop detailed plans and investment cases for establishing or converting UK manufacturing facilities. Eligible manufacturing scales include:
- pilot scale manufacturing (flexible initial production under real-world conditions),
- demonstration scale (intermediate, repeatable production representative of final manufacturing workflows),
- industrial scale (high-volume mass manufacturing).
Technology areas in scope include:
- electrical energy storage (batteries, supercapacitors, battery management and integrated systems),
- electric machines and associated drivelines,
- power electronics including Vehicle to Everything capabilities,
- fuel cell systems and balance of plant, hydrogen storage and management,
- lightweight vehicle and powertrain structures,
- zero emission vehicle assembly.
The programme will also consider upstream supply chain elements, circularity and design for disassembly, digital transformation in manufacturing (including AI and digital twins), decarbonisation of manufacturing processes and lean manufacturing approaches.
Projects must address market entry into on-highway and off-highway vehicle segments, and proposals should be at or above TRL5 or MRL4; applications focused on early-stage technical research or products that are too immature will not be funded.
How to apply and who qualifies
Lead applicants must be UK-registered businesses of any size. Research organisations, charities and public sector bodies may participate as subcontractors but cannot lead. Subcontractors can be UK-based or overseas but use of overseas subcontractors requires a clear rationale and evidence that UK providers were unsuited or unavailable; lower cost alone is not enough.
Applicants must ensure they submit to the correct competition and that their proposal sits within the stated scope. Projects must always start on the first day of a month and cannot begin work until Innovate UK issues a Grant Offer Letter.
Innovate UK cautions that competition is strong; based on prior experience applicants might expect roughly a 40% chance of success, and even high-scoring projects may not be funded if allocations are exhausted or portfolio considerations apply.
Constraints, rules and risks
A number of administrative and policy constraints apply:
- The competition will not fund projects that rely on export performance conditions or on domestic input usage conditions.
- Projects that seek grants exceeding allowable percentages for SMEs or large companies will be rejected.
- Proposals dependent on technologies or processes outside the specified scope will not be supported, for example projects focused primarily on low carbon fuels, production of hydrogen itself, off-vehicle charging infrastructure, or low-powered personal mobility devices.
- Innovate UK reserves the right to adjust funding allocations or revoke decisions if government commitment changes.
- Projects will be screened for prior conduct, including outstanding payments to Innovate UK or UKRI, which may affect funding decisions.
- Sanctions compliance is mandatory; Innovate UK will not fund projects that expose them or beneficiaries to UK sanctions risks.
- Projects involving animals must follow UKRI guidance and provide welfare details at project start-up.
How this fits the market
The DRIVE35 feasibility competition sits at a common intervention point: governments and public funders frequently underwrite feasibility and scale-up planning because it reduces investor risk and helps translate R&D into capital projects. For the UK automotive sector, where investment in battery plants and associated supply chains has lagged behind Europe and North America, better-prepared business cases could shorten the time between pilot technology and commercial production.
The portfolio approach described in the brief suggests funders will balance technology areas and company sizes to align with policy timelines and regional priorities rather than simply funding the highest-scoring single projects.
What it means for the UK automotive ecosystem
If DRIVE35 efficiently moves viable proposals to investor-readiness, it could accelerate domestic manufacturing for key zero emission vehicle components and systems, and help attract private capital into UK facilities. The competition reflects the UK government’s continued focus on securing industrial capability in batteries, electrification and related supply chains — a strategic priority for decarbonisation and economic resilience.
Startups, SMEs and larger manufacturers considering applications should ensure their projects clearly articulate a UK exploitation route, meet the TRL/MRL thresholds and present robust cost and investment models. The practicalities of procurement, subcontractor rationale and the APC contribution should be factored into budget planning from the outset.
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