DRIVE35 Innovation Fund: Demonstrate

Overview

DRIVE35 (Driving Research and Investment in Vehicle Electrification) is a Department for Business and Trade programme supporting the UK’s automotive transition to zero emission vehicles. Working with Innovate UK, the Advanced Propulsion Centre UK (APC), industry and academia, up to £40 million will be invested in innovation projects.

The programme funds R&D to design, develop, and manufacture strategically important technologies, creating high value jobs and attracting long-term investment.

This competition has two strands:

• Strand 1: Collaborate
• Strand 2: Demonstrate (this strand)

Strand 2 supports developing product or process demonstrators that increase commercial exploitation opportunities. Applications must be submitted to the correct strand.

Scope

The aim of Strand 2 is to deliver demonstrators that showcase capability and market potential. Projects must align with at least one theme:

Theme 1 – Promote zero emission vehicle technologies:

• Electrical energy storage (batteries, supercapacitors)
• Electric machines and driveline
• Power electronics (V2X)
• ICE (on-road and off-road) targeting zero harmful emissions
• Lightweight materials
• Fuel cells and hydrogen systems

Including upstream supply chains, circular design, and digital validation tools.

Theme 2 – Enhance Manufacturing Competitiveness:

• Digital transformation (AI, IoT, digital twins)
• Process decarbonisation
• Lean manufacturing
• Supply chain development and UK capability building

Theme 3 – Future Vehicle Innovation:

• Software Defined Vehicles (SDV) and advanced E/E architectures
• Validation and verification using digital twins
• Embedded software and control systems
• Network communications

All proposals must meet the competition’s aims and objectives. A portfolio approach will fund diverse projects across themes and maturity levels.

Key themes and topics

Projects should:

• Support the UK’s net zero automotive goals.
• Deliver technologies or manufacturing capabilities.
• Create and safeguard high value jobs.
• Build a clear pathway to commercialisation.

Project duration

• Last between 9 and 12 months.
• Start by 1 February 2026.
• End by 31 January 2027.
• Must start on the first of the month.

Projects will be expected to showcase outcomes at the 2027 CENEX Expo.

Award value

• Grant request between £500,000 and £1.5 million.
• Minimum of 50% match funding required.
• Up to £40 million total funding available.

Funding rates

For industrial research projects, purposeful research that builds new knowledge and skills to improve or develop products, processes, or services—often through prototypes or system components that validate ideas in realistic settings, 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 use existing knowledge to shape and refine new or improved products, processes, or services—through prototyping, testing, and validation, not routine upgrades and 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

Research organisations can share up to 30% of the total eligible project costs. Within this allocation:

• up to 100% of eligible costs can be claimed if you are an RTO, charity, not-for-profit, public sector organisation, or research organisation
• up to 80% of full economic costs (FEC) can be claimed if you are a Je-S registered academic institution

At least 70% of total project costs must be incurred by commercial organisations.

‍Research participation

Research organisations cannot lead but may participate as subcontractors. While a formal funding share threshold is not defined in this strand, all subcontractor costs must be justified and appropriate to the total eligible project costs. Subcontractors may be UK or international, with overseas use requiring clear justification.

The Advanced Propulsion Centre UK (APC)‍

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

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Eligibility criteria

The project must:

• Lead to a demonstrator product or process.
• Align with at least one scope theme.
• Achieve TRL 5–6 or MRL 4–5.
• Have eligible grant request between £500,000 and £1.5 million.
• Be match funded at least 50%.
• Carry out work in the UK and exploit results in the UK.
• Prepare to present at CENEX Expo 2027.

Lead organisation:

• UK-registered business of any size.
• Academic institutions cannot lead or work alone.

Project team:

• May include UK-registered businesses, academics, charities, not-for-profits, public sector bodies, or RTOs.
• No partner can account for more than 70% of eligible costs.
• Non-UK partners allowed if self-funded.

Subcontractors:

• UK or overseas subcontractors permitted if justified.
• All subcontractor costs must be appropriate and justified.

Number of applications:

• No limit to applications or participations.

Sanctions and animal research:

• Must comply with UKRI guidance.
• No funding for projects involving sanctioned entities.

Previous applications:

• Re-submissions allowed if unchanged.
• Funding withheld for organisations failing to deliver previous projects.

Subsidy control:

• Follows Subsidy Control Act 2022.
• Innovate UK cannot fund organisations in financial difficulty.