DRIVE35 Innovation Fund: Demonstrate 2

Overview

If you’re building a near-market demonstrator in EV tech, battery supply chain, ZEV manufacturing, or software-defined vehicles, this is one of the UK’s most meaningful late-stage R&D opportunities. It’s geared towards projects that can credibly land in industry: clear adoption path, UK impact, and a tight 9–12 month delivery plan with meaningful match funding.

Scope

Your project must deliver a product or process demonstrator that increases capability and commercial exploitation opportunity, supporting the UK’s transition to ZEVs and a net zero automotive industry. It must align to at least one theme:

Theme 1: Promote zero emission vehicle technologies

Theme 2: Enhance manufacturing competitiveness

Theme 3: Future vehicle innovation – software defined vehicles (SDV) and electrical/electronic (E/E) architectures

Projects we will not fund (high-level) include those requesting more than 50% of total project costs as grant; business processes not directly involved in design, test, validation, recycle/reuse, or manufacture; automated driving systems development/integration/manufacture; projects only focused on clean fuels; e-scooters/e-bikes; or projects not aligned to relevant net zero innovation frameworks.

Key themes and topics

Theme 1: Promote zero emission vehicle technologies

• Electrical energy storage (batteries, supercapacitors, components, BMS, integration)
• Electric machines and driveline power electronics (including V2X)
• ICE (on-road only if targeting zero harmful tailpipe emissions using non-fossil fuels)
• ICE (off-road supporting transition to zero emissions using non-fossil fuels)
• Lightweight vehicle and powertrain structures
• Fuel cell systems and balance of plant
• Hydrogen storage and management systems
• Upstream supply chain (raw materials; components; subassemblies)
• Circularity and design for disassembly (disassembly, remanufacture, recovery, reuse)
• Digitalisation of validation/verification/design (digital tools to accelerate development)

Theme 2: Enhance manufacturing competitiveness

• Digital transformation (AI, digital twins, vision systems, IoT)
• Manufacturing process decarbonisation (non-fossil energy, reduced energy, capture and reuse)
• Lean manufacturing and advanced automation (efficiency, circularity, reduced impact)
• Supply chain development (capability/capacity for R&D and industrialisation; flexible lines; UK capability building)

Theme 3: SDV and future E/E architectures

• Software factory approaches for faster feature delivery with safety/security baked in
• Embedded software development and connectivity innovations
• Advanced control systems software and platforms; integration
• Scalable, flexible E/E architectures; comms; HPC; sensors/actuators
• Vehicle and system simulation (digital twins, xIL) for rapid validation
• Safe and secure use of AI in functional software
• AI-driven tools, processes and design practices for SDV/E/E development and validation

Project duration

• 9 to 12 months
• Must start on 1 September 2026
• Must end by 31 August 2027
• All project work must be carried out in the UK and results exploited from or in the UK
• Projects should be prepared to showcase outcomes at the 2027 Cenex Expo

Award value

• Eligible grant funding request must be between £500,000 and £1.5 million
• Grant must be no more than 50% of total eligible project costs (minimum 50% match funding)
• At least 70% of total project costs must be incurred by commercial organisations
• Research organisations undertaking non-economic activity can account for up to 30% of total eligible costs (shared across multiple research organisations)

Funding rates

If your work is classed as industrial research (purposeful research that builds new knowledge and skills to improve or develop products, processes, or services—often validated through prototypes 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

If your work is classed as experimental development (using existing knowledge to shape and refine new or improved products, processes, or services—through prototyping, testing, and validation, 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

Additional notes

• RTOs, charities, not-for-profits, public sector organisations and research organisations may be funded up to 100% for eligible non-economic activity
• Je-S registered institutions can claim 80% FEC (entered as 100% of the 80% figure in IFS)
• A 3.5% industrial contribution is payable to the Advanced Propulsion Centre (APC) by all partners on grant received

Eligibility criteria

Lead organisation

• A UK registered business of any size can lead (and may apply as a single applicant or as part of a collaboration)
• Academic institutions cannot lead or apply as a single applicant

Project requirements

• Total eligible grant request: £500,000 to £1.5 million
• Minimum 50% match funding overall
• Align to at least one theme (above)
• Deliver a demonstrator and target commercialisation or credible industrial use post-project
• Achieve TRL 5–6 or MRL 4–5 by project completion
• Run for 9–12 months (1 Sep 2026 to 31 Aug 2027)
• UK delivery and UK exploitation intent

Consortium and delivery rules

• Partners can include UK registered businesses, academic institutions, charities, not-for-profits, public sector organisations, and RTOs
• Non-funded partners (including non-UK) are permitted; their costs may count toward total eligible project costs if included in IFS
• Subcontracting is allowed (overseas subcontractors require a strong justification beyond lower cost)
• Innovate UK financial viability and compliance checks apply; organisations in financial difficulty are ineligible
• UK sanctions restrictions apply