UK automotive R&D attracts £5 billion investment, but risks remain

But the industry warns that urgent government action is needed to deliver funding and protect the market

UK automotive R&D attracts £5 billion investment, but risks remain

The UK has become a destination of choice for leading automotive companies due to its world-class R&D expertise and ecosystem. A new report from the SMMT (Society of Motor Manufacturers and Traders), Driving Automotive Innovation: Insights From Industry, reveals that the UK benefited from £5 billion of automotive R&D investment during 2024, resulting in 22 British auto R&D centres now contributing to future mobility.

The report, launched at the SMMT’s first Innovation Symposium, found that six in 10 OEM, supplier, and technology businesses would be more likely to conduct R&D following the UK’s new £2.5 billion DRIVE35 transformation fund. However, the SMMT stressed that swift delivery of this funding is required to translate business confidence into action.

The SMMT warns that momentum must begin now to build on the UK’s R&D standing and attract investment to restore the UK to a 1.3-million vehicle manufacturing hub by 2035.

The sector faces immediate geopolitical challenges, such as the potential for another semiconductor chip shortage, citing the current impasse over Nexperia chip supply. The report also highlights a “self-inflicted damage” risk: the proposal to end Employee Car Ownership Schemes (ECOS). Unless this proposal is reversed, it could cause new car sales to reduce by 80,000 annually, dealing a £1 billion blow to the industry and reducing Exchequer receipts by half a billion pounds a year.

The industry’s growth and the success of the Modern Industrial Strategy depend on whole-government alignment, requiring vibrant vehicle markets, lower energy costs, accelerated infrastructure rollout, and a future-proofed skills base.

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