UK EV battery sector attracts £2.1 billion in investment since 2018 outperforming other major economies

A new report reveals that the UK’s electric vehicle (EV) battery sector is attracting record levels of venture capital (VC) investment.

UK-based EV battery start-ups have raised £2.1 billion in funding since 2018.

The report was commissioned by UK Research and Innovation’s (UKRI) Faraday Battery Challenge, delivered by Innovate UK, and produced by Dealroom. The report also highlights the UK’s leading role in advancing groundbreaking EV battery innovations. For the UK EV battery market, 2023 was a particularly strong year, with £1 billion of private investment in EV battery start-ups.

Fourth Largest Investment Recipient

The UK now ranks as the fourth largest recipient of EV battery VC investment since 2018, following the US, China, and Sweden. It has experienced some of the strongest VC investment growth in recent years, moving up to third place in 2023 and 2024.

The Faraday Battery Challenge has been instrumental in advancing the UK’s EV battery sector, supporting 52 UK start-ups valued at over £1.5 billion and raising £770 million in VC investment since 2018.

Beyond EV batteries, the Faraday Battery Challenge has funded more than 100 UK start-ups in related sectors, creating an ecosystem valued at over £2.4 billion, raising £1.2 billion since 2018, and employing 2,400 people in the UK.

Outperforming Other Major Economies

The report also highlights that:

• The UK outperforms other major economies (per capita and GDP) like the US, Germany, and France, while being outranked by Sweden, Norway, and Estonia.
• The UK ranks sixth by combined enterprise value of VC-backed EV battery start-ups, with China (CATL), the US, and Sweden (Northvolt) leading in value creation.
• Nearly half of UK EV jobs have been created by start-ups founded in the last 10 years.
• The top VC investment segment in the UK since 2018 is EV battery recycling and second-use, with over £940 million raised.

Global EV Battery Market Trends

Looking at the global EV battery market, the report found that:

• Global EV battery VC funding has risen thirty-fold in the past decade.
• Investors provided £6.1 billion in global EV battery VC funding in 2023 alone.
• Funding in 2024 has started more slowly due to fewer large investment rounds, reflecting broader trends in the global venture capital market.

Rising Demand for Investment

The report indicates a significant increase in investor demand over the past five years, both globally and in the UK.

In the UK, government-led initiatives to make all new cars and vans zero-emission by the 2030s could be a factor in maintaining investor interest in further developing EV battery technology.

Raising Over £1.2 Billion in Funding

Thomas Bartlett, Deputy Challenge Director at the Faraday Battery Challenge, commented:

“The global EV battery ecosystem is accelerating at an unprecedented pace, attracting record-breaking investments that are leading to increasing innovations and success stories.

“The UK’s own EV battery ecosystem is reaping the benefits of this boom, with Faraday Battery Challenge-funded start-ups and scale-ups raising over £1.2 billion in VC funding since 2018. The bulk of this investment has been made in the last two years alone, suggesting that demand to invest is only getting stronger.”

These signs of healthy investment in the UK EV battery sector come at a critical time, as 17.9% of UK EV market sales are now battery-powered vehicles as of May 2024.

This brings the UK closer to meeting the Zero Emissions Vehicle (ZEV) mandate, with the country also recently reaching the milestone of over one million EVs on British roads.

A Leading Role in UK Growth

Yoram Wijngaarde, CEO and founder of Dealroom.co, added:

“Electric vehicles and the EV battery ecosystem present a huge opportunity for innovation, impact, and growth. Start-ups are already playing a role at every stage of the supply chain, from material production to recycling. Not only will EV battery demand continue to grow, but it will also become part of each country’s critical infrastructure.

“The UK’s homegrown EV battery ecosystem, while still developing, is among the best-funded so far. It is well-positioned to play a leading role in UK growth and sustainable technological resilience.”

Further Information

The Faraday Battery Challenge is a £610 million UKRI Challenge Fund investment that began in 2017, designed to deliver a mission-led research and innovation programme to make the UK’s EV battery market more competitive.

It does this by funding lab-to-factory development, cutting-edge research, and national scale-up infrastructure.

The Faraday Battery Challenge has funded 172 UK companies, 109 of which are start-ups. Fifty-two companies are directly involved in EV battery manufacture, while 50 are involved in EV charging, stationary energy storage, and other related technologies.

Learn more about the future of the UK’s EV battery market and explore investment opportunities.

Source: UKRI