Chancellor announces £2bn to boost EV manufacturing

Chancellor Jeremy Hunt has earmarked £2bn for building electric cars in the UK in his latest update on the country’s finances to the House of Commons.

With an election due to be held by 28 January 2025 but expected within the next 12 months, this was one of the chancellor’s few opportunities to boost his party’s bid for another term of office by splashing some cash, which he’d built up thanks to better than expected tax income.

While there were no new measures for motorists announced, the chancellor announced £2bn of government cash to encourage new investment in zero emission vehicle manufacturing in the country and said that it would “ensure that the UK remains competitive”, and that the money would be welcomed by the likes of Nissan and Jaguar Land Rover. The money is planned to be spread over five years from 2025.

Business secretary Kemi Badenoch welcomed the money, saying that it “builds on recent investment wins”, including £4bn the government says that companies have committed to a UK gigafactory producing batteries for electric vehicles, and a £600m investment from BMW to produce the Mini Electric in Oxford for another generation.

Ministers will be keen to avoid some of their high profile recent failures in this area – back in 2022 around £100m was committed to the Britishvolt gigafactory that was set to build EV batteries in the north of England but later collapsed into administration in early 2023 and the rescue bid running into trouble. The company hadn’t met its targets for the funds, but new investments will be looked at closely for viability.

The decision to build the next generation of electric Mini in the UK depended on a £75m sweetener from the government, with 3,000 jobs potentially on the line amid the danger of production shifting abroad.

Jaguar Land Rover owner Tata announced over the summer that it would be building a new EV battery plant in Somerset, among £15bn of investment the company would be making in building zero emission cars. The government hasn’t yet revealed how much public cash it has promised for Tata’s factory.

The government also announced today that it would be extending to 2030 a £150m programme researching self-driving vehicles, with pilot schemes operating across the country.