The UK government has announced the first automotive 'sector deal' as part of its recently announced industrial strategy across four key industrial sectors, including automotive.

The government says the 'landmark' deal will growing the partnership between government and industry, boosting investment in emerging technology and establishing the UK's 'leadership in meeting the Future of Mobility and Clean Growth Grand Challenges'

The deal includes up to GBP32m of new joint funding for an industry-led supply chain competitiveness programme to help grow the UK supply chain and make it internationally competitive.

There is also GBP26.4m public money, match-funded by industry, for investment in 'three cutting-edge low carbon vehicle projects involving Ford, GKN and Jaguar Land Rover'.

The deal aims to 'build on the unique strengths of the UK automotive sector and further develop the strong collaborative partnership established between government and industry'. It secures joint investment and long-term commitments between government and industry in areas including the design and development of connected and autonomous vehicles (CAV), the research and development of battery technology and accelerating the manufacture of ultra-low and zero emission vehicles.

Announcing the deal, Business and Energy Secretary Greg Clark said: "For decades, the UK's automotive industry has powered our economy forward. Today, automotive firms from around the world choose to set up shop here, citing our history of excellence, skilled workforce and world-leading supply chains.

"In the next 10 years, the sector will see more change than in the previous hundred. From the engines that power our cars, to the way we control them and our attitudes to owning them, technology is changing what the industry looks like and where money can be made.

"The automotive sector will shape our response to the Grand Challenges articulated in our Industrial Strategy, such as Clean Growth and the Future of Mobility – transformations which will forever change how people live, work and travel.

"As ever, partnership will be pivotal. As a result of the Sector Deal, both government and industry will invest about a quarter of a billion pounds to develop and manufacture electric vehicles, create a world-leading testing environment for Connected and Autonomous Vehicles and invest in a new industry-led programme to raise the competiveness of UK suppliers to match the best in Europe.

"As we open the automotive sector's next chapter, we will continue to work with industry to make sure the technologies of tomorrow are developed, tested and manufactured right here in the UK."

Deal 'commitments'

The sector deal brings together a number of long-term joint commitments between government and industry that will help build and establish the UK's leadership in meeting the Future of Mobility and Clean Growth Grand Challenges including:

Low-carbon automotive technologies

  • through the Advanced Propulsion Centre government (APC) is investing GBP500m over 10 years to 2023 to research, develop and industrialise new low-carbon automotive technologies in the UK, with industry providing £500m match funding for collaborative R&D projects

Automotive research and development

  • UK government is investing up to GBP225m from 2023 to 2026 to support R&D in the sector, with industry providing equivalent match funding

Transitioning to ultra-low and zero emission vehicles

  • through the Faraday Battery Challenge, government is investing GBP246m to make the UK a world leader in the design, development and manufacture of batteries for the electrification of vehicles.

Connected autonomous vehicle (CAV) technology

GBP250m of government investment to position the UK as a global leader in Connected and Autonomous Vehicles (CAVs) development and deployment. This includes:

  • GBP150m for collaborative R&D projects from which, to date, GBP100m has been committed to 51 projects, with industry contributing a further GBP56m
  • GBP100m for CAV testing infrastructure, GBP51m of which has so far been committed to 4 infrastructure projects; two 'controlled' testing facilities and two 'live' public testing facilities.
  • Government will be launching a GBP15m simulation and modelling R&D competition on the 16 January to accelerate the development of connected and autonomous vehicles

Supply chain competitiveness and productivity programme

  • GBP16m of government funding, subject to business case, for an industry-led match-funded national supplier competitiveness and productivity improvement programme to support a sustainable and internationally competitive UK supply chain for future volume vehicle production

Europe (and future post-Brexit trade arrangements)

In what the industry will interpret as a sign that intensive lobbying has had some impact, the deal acknowledges that the UK automotive industry has benefited from the European market. As the UK leaves the EU, the industry welcomes the government's ambition to achieve a new relationship that is free from tariffs and without friction to trade – factors that are fundamental to the competitiveness of the UK automotive sector.

Through the deal, government and the auto sector will 'work together to seize opportunities to do far more to engage with the wider world beyond Europe where there is untapped emerging innovation and opportunity'.

Further proposals are being shaped for the next phase of the 'Automotive Sector Deal', with a focus on capitalising on the UK's capabilities including in the digital design and testing space which will substantially reduce the time and cost of developing the next generation of vehicles.

Nigel Stein, industry chairman of the Automotive Council said: "The long-term partnership developed between government and industry has played a key role in the automotive sector's success. It has helped ensure that emerging technologies are developed in the UK and given companies the confidence to invest.

"The Government's Industrial Strategy is a welcome renewed commitment to this partnership, helping to support the sector as we move into the third decade of this century and beyond".

Mike Hawes, SMMT Chief Executive said: "We welcome today's automotive sector deal which will help this vital UK industry meet some of the many global challenges it faces. The deal strengthens our long-standing partnership with government, with a boost to supply chain competitiveness and investment, matched by industry, to keep the UK at the forefront of electric, connected and autonomous vehicles.

See also: UK gov launches 'industrial strategy', including auto sector

UK gov invests in new battery development facility