DRIVE35 Scale-up Fund

Overview

DRIVE35 (Driving Research and Investment in Vehicle Electrification) is a Department for Business and Trade (DBT) 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.

Innovate UK, part of UK Research and Innovation, will work with the Department for Business and Trade (DBT) and the Advanced Propulsion Centre UK (APC) to invest up to £150 million as part of the DRIVE35 Scale Up Fund.

This is subject to a sufficient number of high quality applications being received.

This funding is from the Department for Business and Trade, delivered by Advanced Propulsion Centre and Innovate UK.

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.

This competition is part of a long-term commitment for driving growth sectors within the Governments Industrial Strategy.

Scope

The aim of the Scale up Fund is to support manufacturing facility and process development at pilot scale or demonstration scale. These projects will enable businesses to validate manufacturing capability and commercial viability, achieving market entry at the targeted production volume from the project outcomes.

Your proposal must justify the funding required with a case for government intervention and matched by substantial private investment.

Your project must:

support growth, transition, and resilience of the UK’s automotive supply chain, increasing capability whilst improving productivity, efficiency, and competitiveness
contribute to the UK’s strategic aims and priorities, such as the Industrial Strategy, the Automotive Council’s Roadmaps and Strategic Technology areas for eligible on-vehicle technologies, including zero emission vehicle assembly and the associated supply chain
undertake a scale up project to engineer, create (or convert) and validate process development and manufacturing capability at pilot scale or demonstration scale

Technology scope

This competition fund aims to support the manufacturing development of strategically important technologies for on board vehicle applications in one or more of the following areas:

electrical energy storage: development of batteries, supercapacitors, their components, management, and integrated systems
electric machines and associated driveline
power electronics including Vehicle to Everything (V2X)
internal combustion engine (ICE) for off road applications; we will fund project proposals that support a transition to zero emissions, utilising non-fossil fuels
light weighting materials and manufacturing processes
fuel cell systems and associated balance of plant
hydrogen storage and management systems
zero emission vehicle assembly

Within the technology scope outlined above:

Your project can include:

upstream supply chain for the technologies, including raw materials, component manufacturing and subassembly manufacturing
circularity and design for disassembly projects delivering manufacturing systems which enable the disassembly, remanufacturing, recovery and reuse of materials
the deployment of technologies, to enable productivity and cost competitiveness across the relevant aspects of applicable manufacturing operations in any of the following areas: digital transformation, manufacturing process decarbonisation and lean manufacturing

Digital transformation can include integration of digital tools within the manufacturing process, for example, the use of AI, digital twins, and Internet of Things (IoT).

Manufacturing process decarbonisation can include processes that use renewable energy sources or innovations enabling reduced energy consumption within manufacturing processes, including capture and reuse.

Lean manufacturing can include implementation of innovative lean principles to improve efficient use of materials used in processes, reduce their environmental impact and improve efficiency including the use of advanced automation techniques.

Scope of activities

This competition fund aims to support the development of manufacturing readiness at pilot scale or demonstration scale.

Your project can include the activities required to design, build (or convert) and commission a pilot or demonstration scale manufacturing facility. You must develop your readiness for manufacturing of zero emission vehicle technologies, including the following activities as examples:

manufacturing facility planning and engineering, including for example, detailed facility or process planning and engineering, finalisation of site selection
fabrication and construction work
manufacturing equipment creation, conversion and procurement, for example, detailed production line design, equipment integration with site infrastructure, specification, procurement and purchasing
equipment installation
equipment commissioning, including for example, initial operation through to hot commission and run at rate, materials required for commissioning of equipment and processes
process development
development of quality control and quality assurance process and equipment
advanced product quality and planning (APQP) activities required, up to and including production launch activities
implementation of technology to enable efficient and effective production processes
staff training
activities focussed on product development required for ’design for manufacture’, where this enables your technology or product to be adapted for your target scale manufacturing, activity must be no more than 50% of the project eligible costs
development of UK supply chain for your target production scale
test, validation and verification of components and systems which are manufactured for scale up as part of this project
dissemination to enable market engagement and market feedback
limited commercial activity during the active phase of this project, it is defined in the Scale of facilities section

Scale of facilities

Innovate UK recognise that companies in different segments of the zero emission vehicle supply chain use different terminology to describe their manufacturing development phases.

These are not suggested as absolute definitions, but instead as general categories to enable you to communicate the intention of your project:

The definitions are:

pilot scale: scale up stage at which flexibility is key, utilised to develop initial production capability under real world conditions, whilst still maintaining significant flexibility for improvements once validated it will be similar to a low volume production facility
demonstration scale: scale up stage to intermediate production scale, that reflects a production representative manufacturing workflow, focused on repeatability with lower flexibility than pilot, once validated it will be similar to a medium volume production facility

You may use your established terminology to describe your project in your application, but you must explain this clearly with regards to your goals and stages of development.

It may not be necessary to take each of these steps to get your technology to market, or you may take a different route. You must be clear about the objectives and scale of your project in your application.

Target market

The aim of this competitive fund is to develop manufacturing processes and facilities that enable businesses to take eligible technologies through scale up and market entry and growth. As such, you must outline how your project will enable you to enter the following vehicle supply chains or markets:

on-highway vehicles, for example including L-category, motorbike, car, light commercial vehicle, bus, coach, and truck applications
off-highway vehicles and Non Road Mobile Machinery (NRMM), for example, including construction, agriculture, mining, and other off-highway applications

You must indicate how:

you will engage your target vehicle related customers through the delivery phase of this project
this project will enable you to meet their criteria for adoption
you will feed this information back into the project to ensure it remains targeted on successful commercial outcomes

You must explain where your scale up project enables entry into other markets. These may be outside of the target markets, for example, near term or early adopter markets. You must be clear how your project prepares your business for entry into one of these vehicle markets following the projects completion.

You must indicate how you will engage your target vehicle-related customers through the delivery phase of this project, how this project will enable you to meet their criteria for adoption, and how you will feed this information back into the project to ensure it remains targeted on successful commercial outcomes.

Eligible costs

labour costs: this includes the costs of employed staff working directly on the project, including indirect back office staff who support project activities like budgeting, project reporting, and recruiting
overheads: as a labour cost
materials costs: costs for materials used in the research, development and scale up process
subcontracting costs: costs for subcontracting specific tasks or services to third-party providers
travel and subsistence costs: costs for travel and subsistence related to the project
capital equipment costs: costs for purchasing or leasing new equipment necessary for the project, including machinery, tools, computers, AV, furniture and other equipment required for scale up activities
capitalised labour costs: labour costs capitalised as part of the delivery of a capital project, this must not include labour costs associated with operational elements of a project
capital other costs: any other project capital costs
capital utilisation costs: costs for utilising equipment that is not claimed as capital costs and is necessary for the project, including machinery, tools, and other equipment required for scale up activities
indirect costs: other indirect costs that are necessary for the project

Capital property costs:

construction costs, for example, new build, refurbishment and fit-out
equipment procured from a works contractor, for example, furniture, fixtures and fittings, IT and AV costs
equipment, professional fees including legal, Project Manager or Quantity Surveyor, design fees, commissions, statutory fees, consultant fees, project insurance

Ineligible costs include:

working capital to enable commercial production
costs of materials sold as part of limited commercial activity
costs or expenses that will be incurred or defrayed outside of the time period covered by the live phase of the project
contingency costs
any fees associated with any periodic audit or accountancy reports that we require in accordance with the grant
land purchase costs or property acquisition, including acquisition price, Land Registry fees and Stamp Duty Land Tax (SDLT)

Co-investment

This competition fund aims to support businesses in making substantial private co-investment alongside the public intervention. You will be asked to define a total investment for business expansion, of which your eligible scale up project is expected to be a subset of your overall required activities.

You must describe how your project will enable you to unlock substantial private investment of at least twice your grant request. This is to enable you to complete your wider business expansion objectives, including where appropriate the commercialisation of your technology.

The timing of this investment must coincide with the grant award stage or during the project delivery stage.

As an example, if your grant request is for £5 million, you must describe how this grant will unlock at least £10 million in additional private investment. To ensure the total investment, public and private, would be at least £15 million.

This is true of both equity financed businesses, for example, venture capital or private equity backed companies, as well as established businesses which are funded by other means.

For the avoidance of doubt, you may include all equity, debt, corporate and other co-investment within this category. You may not include other government grants within this co-investment.

Innovate UK expect this co-investment to cover costs that are much broader than the costs funded directly by the project, for example:

working capital required for market entry
purchase of land
fundamental R&D costs for future products

This list is not intended to be exhaustive.

You must demonstrate that the government funding enables or unlocks your investment in a way that would not happen in the absence of the funding.

Limited commercial activity

You will be able to undertake some limited commercial activity during the live phase of your project. Limited commercial activity means commercial activity undertaken for the primary purpose of supporting:

research
development
innovation
verification or validation

Limited commercial activity extends to the point at which any of the following criteria are reached, but no further:

Technology Readiness Level 9
Manufacturing Readiness Level 9 is achieved
production approval is completed when APQP Production Part Approval Process is completed, or a similar product lifecycle management methodology
product certification for sale is completed when the product has been certified for sale by a regulated body
product type approval is achieved to required legislative standard
production line utilisation for commercial production is above 50%
production line is operating in a profit making state

TRL 9 is achieved when:

the technology system has been qualified through operational experience
the technology has been applied in its final form and under real world conditions
real world performance of the technology is a success
the vehicle or product has been launched into the market place

MRL 9 is achieved when:

target volume rate production capability has been demonstrated
major system design features are stable and proven in test and evaluation
materials are available to meet planned rate production schedules
manufacturing processes and procedures are established and controlled to three-sigma or some other appropriate quality level to meet design characteristic tolerances in a low rate production environment
manufacturing control processes are validated
cost model has been developed for full rate production

You can find further details in the Automotive Technology and Manufacturing Readiness Levels Guidance Document – Advanced Propulsion Centre.

Note, eligible limited commercial activity will not extend more than 180 days beyond the start of production of the technology under development. You will not be able to claim for the cost of any materials utilised in saleable limited commercial production output.

Completing your grant offer conditions

Following award of a grant offer, you will have a period of up to nine months, extendible by three months (plus an additional one month in the case that you have evidence that you are in the very final stages of raising investment) to raise the match funding required to deliver this project. Further details about this requirement are included in the ‘what happens if you receive a grant offer’ section.

Portfolio approach

The DRIVE35 Scale Up Fund will fund a portfolio of projects across different risk profiles, technology types, vehicle applications, markets, technological maturities, budgets and organisational sizes which are aligned to policy and regulatory deadlines to enabling automotive transformation. Innovate UK call this a portfolio approach.

The range of factors managed through this portfolio approach are designed to be complimentary to the overall aim and delivery of the competition fund. The portfolio approach means that there may be occasions where a lower scoring project is supported, superseding a higher scoring application.

Eligibility

Your project must:

be a single applicant or consortia led
have a total grant funding request of between £2.5 million and £20 million
have total eligible costs of at least £5 million
last between 12 to 46 months, including an initial period where you can raise the match funding before your project starts
carry out its project work in the UK, with only minor elements overseas with significant justification
intend to exploit the results from or in the UK
start from 1 June 2026
end by 31 March 2030

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 R&D project costs. Eligible capital costs are explained within the application. 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 submission date. Innovate UK 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.

Raising additional grant funding

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.

Research and technology organisations (RTO’s) and 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 non-UK partners, including partners based in the EU, who bring their own funding. Non-UK partners are permitted to carry out project work from within their home countries and exploit results overseas. 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. We 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

A business can lead or collaborate on any number of applications.

An academic institution, research and technology organisation (RTO), charity, not for profit or public sector organisation can collaborate on any number of applications.

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.

Exclusions

Innovate UK are not funding projects that:

are not focussed primarily on developing and validating manufacturing processes and assets
request more than 50% of total project costs as grant for an SME, or 30% for a large organisation
are not aligned with the UK Industrial Strategy
do not have a robust future plan to enter the zero emission vehicle supply chain
are not of future benefit to the automotive sector
are focussed on small personal mobility applications such as e-Scooters, e-Bikes, or other low-powered mobility devices
do not lead to significant business or production scale up and expansion
are focussed on technologies or processes which are too technologically immature to scale with increasing market demand
focus on fossil fuelled internal combustion technology
are focussed on fuel retail or wholesale fuel supply
are focussed on the development or production of low carbon fuels
are focussed on the production of hydrogen
are focussed on off-vehicle charging infrastructure
are focussed on energy retail or wholesale energy supply
are focussed primarily on the development of digital or data technologies
are focussed on speculative site enabling projects

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 £150 million has been allocated to fund scale up projects from this competition fund. This is subject to a sufficient number of high quality applications being received. Funding will be in the form of a grant.

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

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.

The grant requested must be the minimum required to ensure sustainability of the investment.

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

up to 50% if you are a micro or small or medium sized organisation
up to 30% if you are a large organisation

For more information on company sizes, please 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 10% 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 10% 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.

APC industry support

In securing funding from this programme, each participant receiving a grant will pay an industrial contribution to the APC operating budget. This is set at 3.5% and is payable on each grant payment received.

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