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The United Kingdom has announced a 10-year industrial strategy aimed at revitalizing its automotive sector and enhancing its global competitiveness. The strategy focuses on three key areas: sustainability, competitiveness, and innovation.
The plan, which was unveiled at the SMMT International Automotive Summit on 26 June 2025, commits up to £4.3 billion in funding for advanced manufacturing and vehicle electrification. This includes a £2 billion capital and research and development (R&D) fund for zero-emission vehicle manufacturing to 2030, an additional £500 million R&D funding to 2035 under the DRIVE35 initiative, and a £452 million Battery Innovation Programme to support next-generation battery technologies crucial for electric vehicles (EVs).
An essential aspect of the strategy is sustainability and the circular economy. The plan emphasizes building a robust battery sector, expanding commercial recycling capabilities, and increasing battery collection rates to reduce demand for virgin materials. A Circular Economy Strategy is scheduled for autumn 2025 to further boost supply chain resilience and reduce environmental impact.
Recognizing the high energy costs as a major burden for automotive manufacturers, the strategy includes measures such as the British Industrial Competitiveness Scheme, which aims to reduce electricity costs by up to 25% for qualifying manufacturers starting in 2027. This will help alleviate one of the key operational challenges impacting competitiveness.
The strategy sets ambitious growth and innovation targets, aiming to restore the UK to a top 15 vehicle manufacturing nation by 2030, targeting the production of 2.2 million new vehicles annually and generating £50 billion in economic value by 2030. This is supported by a broader 10-point plan and efforts to double annual investment in advanced manufacturing by 2035.
Industry leaders such as the Society of Motor Manufacturers and Traders (SMMT) have welcomed the strategy, viewing it as pivotal for securing the long-term future of UK automotive companies. However, challenges remain, particularly in consumer confidence in zero-emission technologies, with car manufacturers having offered ZEV incentives exceeding £6.5 billion since the mandate's introduction.
The UK's automotive industry finds itself in geopolitical crosswinds, with deals with the US and openness to Chinese carmakers. The US has reduced tariffs on UK exports to 10%, leaving other European countries subject to higher rates, while China presents an increased opportunity due to US policy and a liking for the country. The UK-EU relationship remains strained, with many in the EU not considering the UK a priority, and Brexit not being a top concern.
Despite these challenges, the UK's automotive industry appears poised for a significant transformation, with the government's ambitious 10-year plan set to kick-start an era of economic prosperity, as stated by Johnathon Reynolds MP, UK secretary of state for business and trade. The strategy prioritizes the automotive sector, reduces electricity costs for vehicle manufacturers, and strengthens supply chains, ensuring the sector's sustainability and innovation for the coming decade.
[1] UK Government (2025). [UK Automotive Industrial Strategy]. Retrieved from https://www.gov.uk/government/publications/uk-automotive-industrial-strategy/uk-automotive-industrial-strategy [2] UK Government (2025). [Battery Innovation Programme]. Retrieved from https://www.gov.uk/government/publications/battery-innovation-programme/battery-innovation-programme [3] SMMT (2025). [UK Automotive Industrial Strategy]. Retrieved from https://www.smmt.co.uk/policy/policy-archive/uk-automotive-industrial-strategy/ [4] UK Government (2025). [British Industrial Competitiveness Scheme]. Retrieved from https://www.gov.uk/government/publications/british-industrial-competitiveness-scheme/british-industrial-competitiveness-scheme
- In an effort to bolster its global competitiveness, the UK's 10-year industrial strategy includes a relief for electricity costs through the British Industrial Competitiveness Scheme, starting in 2027, which aims to reduce costs by up to 25% for qualifying manufacturers.
- Beyond its focus on the automotive sector, the UK's strategy also acknowledges the importance of casino-and-gambling in the circular economy, as the Battery Innovation Programme, worth £452 million, supports next-generation battery technologies crucial for electric vehicles (EVs), which could lead to increased demand for casino games powered by renewable energy sources.
