DRIVE35 Innovation Fund: Demonstrate 2

Overview

DRIVE35 (Driving Research and Investment in Vehicle Electrification) is a Department for Business and Trade led programme aimed at transforming the UK’s automotive industry. This is achieved by supporting R&D and the commercial scale up of innovative zero emission vehicle technologies, and unlocking capital investment in zero emission vehicles, batteries and their wider supply chain.

The Department for Business and Trade (DBT) will work with Innovate UK, part of UK Research and Innovation, the Advanced Propulsion Centre UK (APC) and the automotive industry and academia, to invest up to £33 million in innovation projects.

The DRIVE35 Innovation Fund is part of a long term commitment for the driving growth sectors within the governments Industrial Strategy.

Scope

The aim of DRIVE35 Innovation Fund is to support R&D projects that design, develop and manufacture strategically important technologies in the automotive sector. Your project will support the UK’s transition to zero emission vehicles and a pathway to a net zero automotive industry.

The aim of strand 2 (this strand) is to develop a product or process demonstrator, to show increased capability and commercial exploitation opportunity as a result of the project.

Your proposal must fall within one or more of the following:

Theme 1: Promote Zero Emission Vehicle Technologies:

You must focus on product and process innovations that contribute to achieving zero emissions for on board vehicle applications in one or more of the following areas:

electrical energy storage: development of batteries, supercapacitors, their components, management, and integration systems
electric machines and associated driveline
power electronics including Vehicle-to-Everything (V2X)
Internal Combustion Engines (ICE) for on road applications, we will only fund project proposals which aim to achieve zero harmful tailpipe emissions utilising non-fossil fuels
Internal Combustion Engines (ICE) for off road applications, we will fund project proposals that support a transition to zero emissions, utilising non-fossil fuels
lightweight vehicle and powertrain structures
fuel cell systems and associated balance of plant
hydrogen storage and management systems

Within the technology scope outlined above;

Your project can include:

upstream supply chain for the above technologies including raw materials, component manufacturing, subassembly manufacturing
circularity and Design for Disassembly: projects focused on the disassembly, remanufacturing, recovery, and reuse of materials
digitalisation of validation, verification, and design: use of digital tools to enhance the design, validation, and verification processes for the listed technologies

Theme 2: Enhance Manufacturing Competitiveness

R&D projects which use innovations to enable productivity and cost competitiveness and reduce embedded carbon. These will be across all aspects of zero emission vehicle and technology manufacturing and their associated supply chain in one or more of the following areas:

Digital Transformation: integration of digital tools within the manufacturing process, for example, the use of AI, digital twins, vision systems and internet of things (IoT)
manufacturing process decarbonisation: switching processes to use non fossil energy sources or innovations enabling reduced energy consumption within manufacturing processes including capture and reuse
Lean Manufacturing: implementation of innovative lean principles to improve circularity of materials used in processes, reduce their environmental impact and improve efficiency including the use of advanced automation techniques
Supply Chain Development: initiatives for suppliers to improve their processes, capability and capacity for R&D and subsequent industrialisation, for example, flexible production lines to service multiple customers to lower capital investment as well as UK capability building to enable market access, and sustainability

The technologies in scope within this theme apply to any component, sub assembly or system involved in the manufacture of zero emission vehicles. Your proposal must have an outcome which increases the likelihood and competitiveness of manufacturing zero emission vehicles and their supply chain in the UK.

Theme 3: Future Vehicle Innovation – Software Defined Vehicles (SDV) and Electrical/Electronic (E/E) Architectures

Software Defined Vehicles (SDV) and Electrical & Electronic (E&E) Architecture is focused on enabling features through software and involves a major paradigm shift and redesign across the electrical and electronic architectures. This transformation is critical to supporting zero-emission vehicle functionality and leveraging UK innovation strengths for global competitiveness.

This is system, vehicle and process-level evolution in one or more of the following areas:

delivering features faster, through a shift to rapid software native tools and processes adapted to meet automotive safety and security requirements (software factory)
innovations in embedded software development and connectivity to enhance performance, safety, and time to market
development of advanced control systems software and platforms, including software and control systems integration
scalable and flexible future E/E architectures, communication systems, and high performance compute including their systems, components, sensors and actuators
vehicle and system level simulation, including the use of digital twins and in the loop (xIL) innovations to enable rapid simulation, optimisation, and validation of interconnected systems
innovations in the safe and secure use of ai in the functional software
innovations in tools, processes, and design practices for SDV and E/E architectures, including ai-driven approaches for development, validation and optimisation

Portfolio approach

Innovate UK want to fund a variety of projects across different strands, themes, technologies, markets, organisational size, technological or manufacturing level maturities or focus, and research categories. Innovate UK call this a portfolio approach.

Eligibility

Your project must:

lead to a demonstrator product or process to enable new commercial opportunities or secure follow on investment
have total eligible grant funding request of between £500,000 and £1.5 million
be a minimum of 50% match funding, for example, if you are asking for £500,000 in grant your total eligible project costs need to be a minimum of £1 million
align to at least one of the three scope themes
be achieving TRL 5-6 or MRL 4-5 by completion, based on published Automotive Technology and Manufacturing Readiness Levels
last between 9 and 12 months
carry out all of its project work in the UK
intend to exploit the results from or in the UK
start from 1 September 2026
end by 31 August 2027

As a key component of the dissemination requirements for this competition, there will be an opportunity to showcase your project outcomes at the 2027 CENEX Expo. All projects must be prepared for potential selection to represent themselves at this event.

Projects must always start on the first of the month, even if this is a non-working day. You must not start your project until your Grant Offer Letter has been approved by Innovate UK. Any delays within Project Setup may mean we need to delay your project start date.

You must only include eligible project costs in your application. See our overview of eligible project costs. For specific guidance, see the eligibility section in this competition.

If your project’s total grant funding request or duration falls outside of our eligibility criteria, you must provide justification by email to support@iuk.ukri.org at least 10 working days before the competition closes. We will decide whether to approve your request.

If you have not requested approval or your application has not been approved by us, you will be made ineligible. Your application will then not be sent for assessment.

Lead organisation

To lead a collaborative project or work alone your organisation must be a UK registered business of any size.

More information on the different types of organisation can be found in our Funding rules.

Academic institutions cannot lead or work alone.

Project team

To collaborate with the lead, your organisation must be one of the following UK registered:

business of any size
academic institution
charity
not for profit
public sector organisation
research and technology organisation (RTO)

Each partner organisation must be invited into the Innovation Funding Service (IFS) by the lead to collaborate on a project. Once partners have accepted the invitation, they will be asked to login or to create an account in IFS. They are responsible for entering their own project costs in the application.

To be an eligible collaboration, the lead and at least one other organisation must:

apply for funding when entering their costs into the application.
include rationale for the collaboration and describe the structure in your application

Non-funded partners

Your project can include organisations who do not claim any funding for their work on the project. Their costs will be covered from their own resources. These can include UK, EU and other non-UK organisations. Non-UK partners are permitted to carry out project work from within their home countries and exploit the results outside the UK.

Where non-funded partners have been invited to the application on IFS, their costs will count towards the total eligible project costs.

Subcontractors

Subcontractors are allowed in this competition.

Subcontractors can be from anywhere in the UK and you must select them through your usual procurement process.

You can use subcontractors from overseas but must make the case in your application as to why you cannot use subcontractors from the UK.

You must provide a detailed rationale, evidence of the potential UK contractors you approached and the reasons why they were unable to work with you. Innovate UK will not accept a cheaper cost as a sufficient reason to use an overseas subcontractor.

All subcontractor costs must be justified and appropriate to the total project costs.

Number of applications

There is no limit on the number of applications an organisation can be involved in.

Sanctions

This competition will not fund you or provide any financial benefit to any individual or entities directly or indirectly involved with you, which would expose Innovate UK or any direct or indirect beneficiary of funding from Innovate UK to UK Sanctions. For example, through any procurement, commercial, business development or supply chain activity with any entity as lead, partner or subcontractor related to these countries, administrations and terrorist groups.

Use of animals in research and innovation

Innovate UK expects and supports the provision and safeguarding of welfare standards for animals used in research and innovation, according to best practice and up to date guidance.

Any projects selected for funding which involve animals will be asked to provide additional information on welfare and ethical considerations, as well as compliance with any relevant legislation as part of the project start-up process. This information will be reviewed before an award is made.

You can use a previously submitted application to apply for this competition.

External

Innovate UK are not funding projects that are:

requesting more than 50% grant for total project costs
focused on business processes not directly involved in the design, test, validation, recycle or reuse or manufacture of vehicles, for example, company back office systems and infrastructure
including the design, development, integration, use, test or direct manufacturing of automated driving systems (ADS)
are only focussed on the development of clean fuels
not aligned with the UK net zero research innovations framework
developing solutions such as e-Scooters or e-Bikes

Innovate UK cannot fund projects that are:

dependent on export performance, for example, giving a subsidy to a baker on the condition that it exports a certain quantity of bread to another country
dependent on domestic inputs usage, for example, giving a subsidy to a baker on the condition that it uses 50% UK flour in their product

Funding Costs

Up to £33 million UK Government grant funding has been allocated to fund innovation projects in this competition. This is subject to us receiving a sufficient number of high quality applications. Funding will be in the form of a grant.

Innovate UK reserve the right to adjust funding allocations for any of our competitions under exceptional circumstances, for example, in response to changes in policy, portfolio funding considerations, or broader government funding decisions.

These are pre-production projects and you must apply for the minimum amount of grant funding required to make your project viable.

Your total grant funding request must be no more than £1.5 million and no more than 50% of your total eligible project costs. This is regardless of your individual partners’ grant claims.

A minimum of 70% of your project’s total project costs must be incurred by commercial organisations.

If your organisation’s work on the project is commercial or economic, your funding request must not exceed the limits below. These limits apply even if your organisation normally acts non-economically but for the purpose of this project will be undertaking commercial or economic activity.

The balance between your total eligible project costs and the amount of grant awarded must be funded by the organisation receiving the grant.

For industrial research projects, you can get funding for your eligible project costs of:

up to 70% if you are a micro or small organisation
up to 60% if you are a medium sized organisation
up to 50% if you are a large organisation

For experimental development projects which are nearer to market, you can get funding for your eligible project costs of:

up to 45% if you are a micro or small organisation
up to 35% if you are a medium sized organisation
up to 25% if you are a large organisation

For more information on company sizes, refer to the company accounts guidance.

If you are applying for an award funded under State aid Regulations, the definitions are set out in the European Commission Recommendation of 6 May 2003.

Innovate UK may revoke our decision to provide funding without notice if government commitment for this initiative is withdrawn.

Research participation

The research organisations undertaking non-economic activity as part of the project can share up to 30% of the total eligible project costs. If your consortium contains more than one research organisation undertaking non-economic activity, this maximum is shared between them. Of that 30% you can get funding for your eligible project costs of up to:

100% of your eligible project costs if you are an RTO, charity, not for profit organisation, public sector organisation or research organisation
80% of full economic costs (FEC) if you are a Je-S registered institution such as an academic

Eligibility criteria for claiming 80% of FEC funding

Research organisations using the Je-S system must submit their costs through the Je-S system which calculates the 80% FEC figure.
On IFS, only the 80% FEC output should be entered at 100% funding.
Applicants do not need to show the remaining 20% on the finance table.

To find out more see our: Cost Guidance for Academics.

The Advanced Propulsion Centre UK (APC)

A 3.5% industrial contribution is payable to the APC by all partners on grant received.

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