The UK automotive sector could attract billions of pounds in additional investment and create high-value jobs if the government provides targeted support for research, development and innovation (RD&I), according to a new report from the Society of Motor Manufacturers and Traders (SMMT).
The report, Turning Automotive Innovation into UK Investment, found that 83.9% of automotive businesses surveyed would be more likely to begin or expand their UK-based RD&I investment over the next five years if the government introduced targeted support and reduced business costs. Almost four in 10 (38.7%) said they would be significantly more likely to invest.
The findings highlight the potential for the UK to build on an automotive sector already investing £5.3bn annually in the country, with opportunities spanning electric vehicle (EV) batteries and motors, lightweight materials, autonomous driving software, artificial intelligence (AI) and cyber security.
The UK is already considered to have several competitive advantages as a destination for automotive innovation. Nearly three quarters (74.2%) of businesses surveyed identified the country’s talent pool as a key strength, while 58% highlighted collaboration opportunities with world-class universities and 52.5% pointed to government funding support. However, the SMMT argues that the country must do more to translate these innovation capabilities into commercial production if it is to capture the full economic benefits.
According to the research, the difficulty of scaling new technologies from the laboratory to commercial production in the UK was identified as the biggest barrier to growth. Without a stronger route to market, the country risks developing technologies that subsequently generate investment, manufacturing activity and economic value elsewhere.
The opportunity extends beyond the development of new technologies, with successful commercialisation potentially creating domestic production opportunities, strengthening supply chains and supporting skilled employment.
There is also significant potential for regional economic growth. Four in five of the UK’s 24 automotive R&D centres are located in industrial hubs outside London and the South East, suggesting that additional investment could support manufacturing communities across the country.
To unlock this potential, the SMMT is calling for a targeted, multi-year government funding programme to help early-stage automotive innovations progress towards demonstration, pilot manufacturing and commercial scale-up.
The recommendations come ahead of the government’s 10 Year Plan, which is due to be considered as part of next year’s Spending Review. The SMMT also wants action to reduce industrial energy costs and accelerate grid infrastructure delivery, particularly for energy-intensive advanced manufacturing operations.
Mike Hawes, SMMT Chief Executive, said: “British ideas should create British jobs and growth, as well as global opportunities. Our automotive engineers, businesses and universities are developing technologies the world needs, and this research shows a clear appetite to invest more here.
“But our globally renowned innovation capabilities are only half the opportunity – we must also make the UK a place where ideas are turned into production. Long-term funding, access to growth finance, and competitive energy costs can turn British breakthroughs into thriving businesses and exports, securing more of the economic benefits here in the UK rather than overseas.”
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