Automotive research, development and innovation, or RD&I, is central to the UK’s industrial competitiveness. The sector already invests nearly £5.3 billion a year in Britain, supporting high-value manufacturing, strengthening domestic supply chains and enabling the transition to the next generation of zero emission, connected, software-defined and automated vehicles.

With globally renowned engineering, talent, research and academic capabilities, UK automotive RD&I is in an advanced position globally. However, countries around the world are competing for new investment, making a supportive and internationally competitive domestic environment vital to securing Britain’s growth.

The opportunity

£5.3 billion invested by the UK automotive sector in research and development in 2025.
24 automotive R&D centres across Britain.
74.2% of respondents identify the UK’s accessible talent pool, including skilled engineers, as its greatest strength.
64.5% see next-generation battery technology as a leading growth area for the next decade.
61.3% highlight artificial intelligence as a key discipline for future automotive RD&I.
83.9% would be more likely to increase automotive RD&I, engineering or innovation activity in the UK if its competitiveness improved.

However, the biggest challenge identified by industry is moving from RD&I to commercialisation in the UK, closely followed by insufficient long-term policy certainty. Energy costs, scale-up finance and competition from overseas incentives add further pressure.

The prize for improving UK competitiveness is substantial: 83.9% of respondents would be more likely to increase automotive RD&I, engineering or innovation activity in Britain over the next five years.

Priorities for UK automotive innovation

The report identifies seven priorities for turning Britain’s research and engineering strengths into commercial investment:

Provide long-term certainty from RD&I to commercialisation – Create a predictable pathway from research through demonstration and pilot manufacturing to large-scale investment.
Reduce industrial electricity costs and improve site readiness – Make energy costs, grid connections and sites more internationally competitive.
Mobilise patient capital for scale-up – Improve access to the investment needed to take promising automotive technologies through the commercialisation gap.
Make fiscal incentives competitive and predictable – Maintain a stable R&D tax framework and competitive incentives for engineering, software, prototypes and capital investment.
Connect the UK AI agenda to industrial outcomes – Accelerate automotive applications of AI in manufacturing, digital twins, software-defined vehicles, batteries and supply chains.
Deliver an automotive skills package – Develop the software, AI, battery, power electronics, automation, cybersecurity and advanced manufacturing skills the sector needs.
Strengthen commercialisation, demand, trade and collaboration – Create the conditions for automotive innovation developed in Britain to reach manufacturing at scale.

Read the full research

Discover the survey findings, technology growth opportunities, industry case studies and SMMT’s recommendations for strengthening UK automotive research, development and innovation.

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