Zero emission vehicles

The automotive industry has a long, proud history in the UK, and a bright future. In 2023, the sector, supported 152,000 jobs and contributed £19.4 billion in gross value added to our economy (from a turnover of £85 billion). It is integral to delivering on innovation, net zero and helping to drive economic growth.

More than 25 manufacturers build in excess of 70 models of vehicle in the UK supported by 2,500 component providers and some of the world’s most skilled engineers.

Over 905,117 cars, 120,357 commercial vehicles and 1.62 million engines were built in the UK in 2023. Eight out of 10 cars produced in the UK are exported overseas to 140 different markets worldwide.

We are determined to build on our heritage and continue to secure international investment in the technologies of the future, positioning the UK as one of the best locations in the world to manufacture electric vehicles (EVs).

The future is green

The UK is one of the top 20 countries in the world for electric vehicle growth and penetration rates (Bloomberg, 2024). The Society of Motor Manufacturers and Traders reported that sales of battery and plug-in hybrid vehicles reached 24% of total car registrations in 2023. Charging infrastructure is also speeding ahead, we are continuing to accelerate the rollout of public charge points.

As of 1 July 2024, there were 64,632 public electric vehicle charging devices installed in the UK. This represents a year-on-year growth of 47%.

UK battery manufacturing capability is also expected to grow. Tata has announced an investment of over £4 billion to build one of Europe’s largest gigafactories in Somerset, while completion of the Automotive Energy Supply Corporation’s (AESC) second UK gigafactory will build upon their 2021 £1 billion EV Hub in Sunderland, in partnership with Nissan. By accelerating domestic battery making capacity and removing planning barriers to get shovels in the ground, we will give our manufacturing sector the certainty it needs to flourish.

This builds on the UK’s highly competitive and attractive business environment:

• the lowest corporation tax in the G20 at 25%
• compelling and competitive R&D tax rates
• reduction to 10% corporate tax for any UK Intellectual Property product registered via the Patent Box
• full expensing on capital allowances, allowing companies to claim back 100% of qualifying expenditure

Opportunity highlights

There are significant investment opportunities across the UK supply chain. Areas of expansion include:

Battery technologies

• lithium-ion batteries
• nickel-metal hydride batteries
• cathode materials
• anode materials
• electrolytes
• separators

Power electronics, machines and drives

• inverters, converters and on-board chargers to convert and control electric power in Electric Vehicles (EVs)
• battery management systems (BMS)
• electric motors

Magnets

• rare earth magnets used in hybrid and electric vehicles
• non-rare earth magnets
• magnet recycling

Hydrogen

• Hydrogen fuel cell electric vehicles (FCEVs)
• hydrogen refuelling stations (HRS)
• hydrogen-powered HGVs and buses
• hydrogen fuel-cells
• hydrogen storage tanks

Lightweight materials

• magnesium, carbon fibre composites
• aluminium and matrix composites
• titanium
• glass fibre composites and high-strength steel

Charging infrastructure

• ultra-fast charging stations
• wireless charging
• V2G charging
• roadside charging
• solar canopies
• hub site charging

Commercial maturity

The UK is one of the top 10 countries in the world for electric vehicle growth and penetration rates. The Society of Motor Manufacturers and Traders reported that sales of battery and plug-in hybrid vehicles reached 10.7% of total vehicle sales in 2020.

Charging infrastructure is also speeding ahead, the UK ranks fourth in Europe for the number of AC and DC charging installations.

UK battery manufacturing capability is also expected to grow. 2 battery gigafactories have already been announced for Northumberland, and the UK is keen to secure further investment.

Annual sales of new battery electric vehicles are forecast to reach 2.5 million each year in the UK by 2030. Analysis from Deloitte suggests that between £8 billion to £18 billion investment will be required in the EV charge point infrastructure.

Key UK assets

The UK has regional clusters with strengths across the zero-emission vehicle supply chain.

West Midlands

A centre for the automotive industry and home to the Manufacturing Technology Centre, the National Transport Design Centre, the UK Battery Industrialisation Centre, the Advanced Propulsion Centre, the National Automotive Innovation Centre and Energy Research Accelerator.

The West Midlands is also home to the world’s most renowned construction equipment manufacturer JCB.

Wales

Wales is home to Aston Martin’s DBX factory in St Athan, Toyota’s Deeside Engine Plant and the National Compound Semiconductor Applications Catapult in South-East Wales which has potentially significant implications for the EV automotive industry.

North East

Some of the world’s largest automotive original equipment manufacturers, including Nissan and Komatsu, are in the region alongside a global chain of tier-1 suppliers and specialist SMEs.

The North East is home to the UK’s first battery production facility, AESC.

North West

This is a region of thriving engineering and automotive industry and expertise, with assets such as the Energy Lab at the Graphene Engineering Innovation Centre and the Manchester Fuel Cell Innovation Centre.

The North West is also home to Ford’s major electric vehicle components facility at Halewood.

Oxford-Cambridge Arc and Motorsport Valley®

Oxford is home to the Harwell Campus Energytec Cluster and Faraday Institution. The area is, alongside parts of the Midlands, also known as Motorsport Valley, the undisputed leader in global motorsport.

Seven of ten Formula 1 teams are based there, it is the home of Formula E, and is the leading international supplier to racing series around the world. The UK is an excellent destination for Motorsport R&D due to its highly skilled workforce, universities, relatively low labour costs and R&D tax credits. Over 140 colleges and 30 UK universities are now teaching motorsport-specific skills, helping to safeguard the future of the industry.

Competition drives innovation and these companies invest around 30% of revenues in R&D, an investment that also reaps benefits for automotive companies working in the UK.

R&D capability

The UK government has several ambitious measures to support the transition to zero emission vehicles.

Automotive Transformation Fund (ATF) – The ATF aims to support the creation of an internationally competitive electric vehicle supply chain in the UK.   It provides support to late-stage R&D and capital investments in strategically important technologies. This includes unlocking strategic investments in gigafactories, motors and drives, power electronics, and fuel cell systems. 

Faraday Battery Challenge – Recent announcements have brought the overall budget of the Faraday Battery Challenge to £610 million since 2017, putting the UK at the forefront of the design, development, manufacturing, and recycling of electric batteries.

Driving the Electric Revolution (DER) – £80 million programme for capability and growth of the Power Electronics, Machines and Drives (PEMD) supply chain in the UK.

R&D assets also include:

• the Advanced Propulsion Centre (and associated Spoke Network)
• seven centres of the High Value Manufacturing Catapult
• the UK Battery Industrialisation Centre (UKBIC)
• the Centre for Process Innovation
• the Compound Semi-Conductor Applications Catapult

Business and government support

The UK supports innovation and investment through various schemes, including R&D Tax Relief, Patent Box and Innovate UK Grants.

The National Wealth Fund will bring together key institutions and a compelling proposition for investors. This will mobilise billions more in private investment and generate a return for taxpayers.

£7.3 billion of additional funding will be allocated through the UK Infrastructure Bank so investments can start being made immediately, focusing on further priority sectors and catalysing private investment at an even greater scale. This funding is in addition to existing UK Infrastructure Bank (UKIB) funding.

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