The UK automotive industry could unlock a £4.6 billion boost to domestic manufacturing as car makers ramp up requirements for British-built components amid the transition to electric vehicles, according to analysis from the Society of Motor Manufacturers and Traders (SMMT).
It shows demand for UK-sourced automotive parts rising by 80% to 2030, creating one of the biggest opportunities in a generation for investors to back and benefit from the domestic automotive supply chain, SMMT said.
Significant opportunities exist to support both next generation electric and other vehicle technologies, underlining Britain’s potential to remain a world class automotive manufacturing base, with the ambition to return to annual output of 1.3 million vehicles by 2035.
December 2025 saw the start of next generation volume battery electric car production in Sunderland and, with the planned launch of seven new EV models across the UK this year, BEV volumes are anticipated to more than double by 2028.
As a result, demand for electric motors, power electronics and drive systems (PEMD) is set to surge by more than 350% by the end of the decade, while automotive electronics demand is expected to more than double, driven by the increased use of displays (including head-up displays), wiring systems and computing power in modern electrified vehicles.
There is also potential for increased battery-related localisation, demand for which is set to more than triple by 2030, with significant spending across battery packs, modules and cells, alongside supporting systems such as casings, battery management software and thermal management.
Existing automotive manufacturing remains central to the UK’s value proposition, with interiors, body structures, chassis and exterior components continuing to account for a large share of local supply chain output. High value opportunities remain in seat assemblies, interior and exterior plastics, pressings, castings and braking systems, while demand for internal combustion engine components remains substantial in high-performance engines, transmissions and exhaust systems.
While the UK’s supply chain offers huge potential, the growing connected and automated mobility (CAM) market also presents massive opportunities with a supportive regulatory framework facilitating the shift from testing to deployment. It is set to reach £24 billion by 2040, with driverless taxis already testing in London ahead of planned rollout later this year.
Mike Hawes SMMT Chief Executive, said:
“The UK automotive sector is transforming at pace, and for companies looking to invest in Britain the opportunities are clear. We have the skills, the innovation and the industrial base built on the billions already invested into Britian by global brands. With a modern, long term industrial strategy – with automotive at its heart – the UK is a safe and stable destination for automotive investment amidst fierce global competition, increasing protectionism and geopolitical upheaval.”
