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DRIVE35: Summary Business Case

Published 15 December 2025

1. Executive summary

The DRIVE35 (Driving Research and Investment in Vehicle Electrification) Business Case seeks final approval to launch a £2 billion programme over 5 years from the financial year 2025 to 2026 to the financial year 2029 to 2030. It seeks to transform the UK’s zero emission vehicle (ZEV) manufacturing and supply chain. The Department for Business and Trade (DBT) delivers this programme through formal grant funding agreements (GFAs) with the Advanced Propulsion Centre (APC) and Innovate UK (IUK).

Following approval of the DRIVE35 Business Case, a further £500 million was allocated to support ZEV research and development (R&D) as part of the Industrial Strategy and Advanced Manufacturing Sector Plan. This funding is considered part of the DRIVE35 Programme, bringing the total Capital Departmental Expenditure Level (CDEL) funding allocated to DRIVE35 to £2.5 billion.

DRIVE35 is structured around 3 coherent and modular pillars, each designed to funnel innovation into the others:

• innovation pillar: seeks to distribute R&D grants to develop strategically important zero-emission vehicle technologies, bringing new systems and prototypes to technology readiness
• scale-up pillar: aims to distribute R&D grants to fast-track near-commercial pilots for zero-emission vehicle technologies, enabling manufacturing and market readiness
• transformation pillar: looks to distribute capital grants to drive the industrialisation of an electrified automotive sector in the UK, from vehicle plants to their supply chains

1.1 Programme objectives

The DRIVE35 programme objectives are to:

• substantially increase inward investments into the UK automotive sector
• secure and create high-quality jobs in the UK automotive industry
• deliver significant emission reductions, meeting the government’s climate obligations
• strengthen supply chain resilience, anchoring future vehicle assembly
• help achieve the required battery manufacturing capacity
• enable a decade of R&D investment in UK automotive

DRIVE35 will provide a simpler, faster, and more effective government offer to investors, building on the track record from previous APC and Automotive Transformation Fund (ATF) programmes and competitions. The delivery model is a consortium arrangement between APC, IUK, and DBT, ensuring value for money, operational efficiency and continuity in delivery, building upon industry confidence and ensuring a smooth transition to the new programme.

As outlined in the Business Case, DRIVE35 requires £2.04 billion in capital and R&D funding, alongside required resource funding. The programme has robust governance, risk management, and monitoring and evaluation (M&E) arrangements in place. Total funding, as announced in the Industrial Strategy, is £2.5 billion through to 2035, however this document summarises the programme’s original full Business Case.

2. Strategic case

DRIVE35 is designed to secure the UK’s position as a global leader in ZEV manufacturing and supply chains. The programme addresses the need for the UK automotive sector to strengthen its competitiveness amid rapid technological change, global competition, and ambitious climate targets.

This is an essential part of the actions that government will deploy to increase the volume of vehicles made in the UK to over 1.3 million cars and commercial vehicles by 2035, as set out in the UK’s Industrial Strategy.

DRIVE35 fundamentally reviews, streamlines and consolidates previous support into 3 coherent pillars:

• innovation pillar
• scale-up pillar
• transformation pillar

This maximises impact and bridges the gap between innovation and industrialisation. DRIVE35 aims to:

• increase inward investment
• create and secure high-quality jobs
• deliver significant emission reductions
• strengthen supply chain resilience
• support long-term R&D investment

2.1 Strategic alignment

DRIVE35 aligns with government missions to:

• kickstart economic growth, by supporting jobs and productivity growth
• make Britain a clean energy superpower, by accelerating ZEVs and battery manufacturing

DRIVE35 is integral to the UK’s Industrial Strategy, helping to drive increased electric vehicle (EV) supply chain manufacturing, anchor future vehicle assembly and battery manufacturing in the UK, and ensuring the UK remains at the forefront of automotive innovation, electrification and sustainability.

Investment under DRIVE35 will help achieve our ambitions to nearly double the annual business investment in the UK advanced manufacturing from £21 billion to £39 billion in 2035, driving growth across our economy. ​DRIVE35 will help achieve the Industrial Strategy ambition to increase the volume of vehicles made in the UK to over 1.3 million cars by 2035.

DRIVE35 will work alongside the National Wealth Fund (NWF), who have a mandate to invest £27.8 billion in sectors aligned to the Industrial Strategy, including automotive. Together, DRIVE35 and the NWF represent a complementary and multi-layered offer to investors, combining grants and other policy instruments from the government with a suite of financial products, to increase support across the EV supply chain.

3. Economic case

The economic rationale for DRIVE35 is based on correcting market failures such as:

• high entry cost
• technology lock-in
• co-ordination failures
• the need for greater R&D investment

The programme was appraised against a range of options, with the preferred approach being a backloaded funding profile that aligns support with industry demand and minimises underspend.

DRIVE35 is forecast to:

• leverage £6.6 billion in private investment
• support over 50,000 jobs
• cut up to 10.7 million tonnes of carbon dioxide equivalents (CO₂e) in the UK

The programme is expected to deliver a Benefit-Cost Ratio (BCR) of 4.8, representing high value for money. Additional benefits include enhanced battery manufacturing capacity, reduced dependence on overseas supply chains, and regional economic growth.

3.1 Summary of the analysis of different options

The DRIVE35 Business Case considered a range of options for government intervention in the UK automotive sector, including:

• ‘do nothing’
• extending existing programmes
• several configurations of the new DRIVE35 programme

Each option was assessed for its ability to address market failures, deliver value for money, and achieve strategic objectives.

3.2 Shortlist of options

The final shortlist included:

• Option 1: only committed spend to 2025 (baseline – do nothing)
• Option 3b: DRIVE35 programme with backloaded funding (preferred)
• Option 3c: DRIVE35 programme with a flat funding profile
• Option 4c: DRIVE35 with a flat profile, extending the £2.04 billion capital and R&D budgets to 2035

3.3 Type of economic appraisal used

The department used social cost-benefit analysis to appraise the options. This approach quantified both the costs and the monetised benefits of each option, including employment and R&D spillovers to assess overall value for money.

3.4 Costs, benefits, and risks of shortlisted options

All shortlisted options assumed a total nominal cost of £2.04 billion (capital and R&D).

The preferred option (3b, backloaded DRIVE35) had a discounted net present social value (NPSV) of £6.1 billion and a BCR of 4.8, representing very high value for money. Other options had slightly lower BCRs and NPSVs but followed similar spending profiles.

Risks included the potential for underspend if funding was not aligned with industry demand, and the risk that insufficient intervention would lead to loss of competitiveness, jobs, and investment in the UK sector.

3.5 Rationale for the choice of preferred option

Option 3b (DRIVE35 with backloaded funding) was chosen because it:

• best aligns funding with forecast industry demand
• minimises the risk of underspend
• maximises the opportunity for programme benefits to be realised

It also scored highest against critical success factors such as:

• strategic fit
• ability to address market failures
• value for money
• deliverability

4. Commercial case

The commercial case for DRIVE35 looked at the options available to deliver the programme from maintaining the existing model, in-housing, or through to outsourcing.

The 5 options that were considered are:

• Option A: consortium with DBT: IUK and APC reappointed to work alongside DBT
• Option B: consortium with DBT: new delivery partners
• Option C: fully outsource to IUK and APC
• Option D: fully outsource to new delivery partners
• Option E: un-house delivery using DBT resource

Each option (A to E) was assessed against the criteria that were developed in alignment with the recommendations from the Cabinet Office’s Sourcing Playbook, and ranked as high, medium, or low alignment.

The options were assessed against:

• value for money
• operational efficiency and mobilisation
• proven success and experience
• technical and sector expertise
• industry confidence and familiarity
• separation of key functions

Option A, which maintained existing arrangements, scored highest and was identified as the preferred delivery model. This option ensures operational efficiency, continuity, technical expertise, and strong industry relationships which IUK and APC are uniquely positioned to leverage. This is complemented by policy direction from the DBT Automotive Unit, alongside grant management expertise and oversight from the DBT Grant Delivery Directorate.

The preferred approach offers strong value for money, operational efficiency, and proven delivery capability. This is because:

• as a non-profit organisation, APC operates on a not-for-profit basis – this ensures cost-effectiveness compared to commercial alternatives, which would likely incur higher costs

• operationally, the existing arrangement enables immediate mobilisation, building on established structures, teams, and roles already in place – this continuity avoids the delays and disruption that would result from onboarding new delivery partners and provides familiarity for applicants and stakeholders

• the current delivery consortium has a decade-long track record of success, having supported over 58,000 jobs and delivered significant carbon dioxide (CO₂) savings – working with government, this delivery consortium has leveraged over £6 billion in private investment, demonstrating its effectiveness in catalysing industry engagement

• this delivery model ensured a clear separation of responsibilities between APC, IUK, and DBT.

From a legal and procurement perspective, this arrangement is structured as a grant funding agreement (GFA), not a contract for services, and is therefore not subject to public procurement regulations.

The commercial case also addresses how the delivery model will be implemented, and considers:

• payment mechanisms
• contract management
• intellectual property
• diversity and inclusion
• sustainability
• transformation of undertakings, protection of employment (TUPE)
• modern slavery

The case notes that there will likely be ad hoc delivery requirements that are only anticipated to arise when required or at specific points in the programme lifecycle.

These could include:

• professional services
• research
• monitoring and evaluation services

Such services will be procured as and when required through standard competitive tendering processes in line with the applicable procurement regulations and DBT commercial policy.

5. Finance case

As per the original Business Case, the financial plan for DRIVE35 requests £2.04 billion in CDEL funding over 5 years, plus required Resource Departmental Expenditure Limits (RDEL) funding. Of the total CDEL allocation, 75% is allocated to capital grants (transformation), and 25% to R&D grants (innovation and scale-up).

The spending profile is designed to flexibly respond to forecast industry demand. It reflects the appetite across both the UK and global markets, as demonstrated through previous APC and ATF legacy competitions.

R&D funding will be delivered through GFA with APC and IUK, with robust financial controls, risk management, and assurance processes in place. Capital funding is delivered directly from DBT. The plan is designed to be flexible and responsive to market conditions, with regular reviews and adjustments as needed.

5.1 Financial assumptions

The financial assumptions for DRIVE35 set out how funding will be managed, classified, and controlled throughout the programme. Transformation grants will use CDEL funding, while innovation grants and tech scale-ups will use R&D CDEL funding, each disbursed under the relevant spending powers.

Each sub-programme will run several funding competitions, with application windows to help manage resources and budget. The plan assumes the programme ends in 2030, with grant payments subject to HM Treasury (HMT) approval.

6. Management case

6.1 Programme structure and governance

DRIVE35 is part of the Government Major Project Portfolio (GMPP). The delivery of DRIVE35 is organised around 3 main pillars:

• innovation pillar
• scale-up pillar
• transformation pillar

These are managed concurrently under the oversight of a central Programme Governance Board, the DRIVE35 Strategic Board. The DBT Automotive Unit leads the programme, supported by the Grant Delivery Team, sector analysis, and external delivery partners, namely the APC and IUK.

The governance structure is multi-layered. At the top is the DRIVE35 Strategic Board, which is chaired by the Senior Responsible Owner (SRO). This board is supported by a Monitoring and Evaluation Governance Board and 2 sub-programme Delivery Boards.

Delivery consortia for each funding stream are also established, ensuring that operational and strategic oversight is maintained throughout the programme’s lifecycle. Escalation routes are defined, allowing issues to be raised from project level up to ministerial level as required.

The programme’s success is dependent on several factors. These include timely approval and budget confirmation from HMT, effective collaboration with delivery partners, alignment with other government programmes and regulatory frameworks, and the availability of skilled staff and resources within both DBT and its partners.

6.2 Approach to risk management summary

Risk management for DRIVE35 is systematic and embedded in programme delivery. All risks, assumptions, issues, and dependencies are recorded in a central risks, actions, issues and decisions (RAID) log, which is reviewed monthly for each programme in meetings with delivery partners.

Risks are assessed using DBT’s 5-point scale for probability and impact and are categorised by proximity. Ownership of risks is assigned to the most appropriate delivery partner or DBT function, and escalation routes are in place for risks that fall outside of tolerance to ensure appropriate actions are taken and mitigations applied.

6.3 Evaluation plan summary

The DRIVE35 M&E plan sets out a clear framework for systematically measuring the progress of DRIVE35. It is designed to produce evidence on the effectiveness of the programme’s delivery, and the extent to which the programme is on track to deliver its intended outcomes and value for money. 

The DRIVE35 M&E plan is expected to deliver:

• a comprehensive evaluation framework, setting out the future process and impact evaluations
• a baseline exercise, aiming to collect data on the automotive sector prior to the launch of DRIVE35
• a process evaluation of each DRIVE35 pillar, alongside an overarching synthesis of findings
• an impact evaluation of each DRIVE35 pillar, alongside an overarching synthesis of findings – these will include a Value for Money (VfM) evaluation

Evaluation activities are scheduled at points in the programme, so that findings can be used to inform programme improvements and future policy decisions. The evaluations will be externally commissioned and managed by analysts within DBT. The M&E work will be further guided by a dedicated governance board, involving internal teams, delivery partners and external evaluators.