Committee publication · Correspondence · 9 June 2026
Letter from the Minister for Industry relating to the Automotive sector, 1 June 2026
From: Business and Trade Committee
Inquiry: Industrial Strategy
Summary
Minister for Industry Chris McDonald responds to the Business and Trade Committee's 18 May inquiry on the automotive sector. The letter addresses three issues: the UK's push for inclusion in the EU's Industrial Accelerator Act (arguing against trade barriers), challenges from 2027 Trade and Cooperation Agreement rules of origin for cathode active materials, and UK domestic battery supply chain development including £4 billion committed to DRIVE35.
Key findings
- Ministers have lobbied the EU directly on the Industrial Accelerator Act, arguing the UK-EU automotive industry functions as an integrated system and must not face trade barriers during the legislative process.
- The government recognises the 2027 TCA rules of origin requirement poses 'significant challenge' for UK manufacturers, particularly due to limited European cathode active material (CAM) production.
- Cathode active material production is identified as a strategic priority for UK economic resilience and supply chain security.
- The government has committed over £4 billion to DRIVE35, alongside the Battery Innovation Programme, to support battery R&D and supply chain development.
- Department for Transport will respond separately on the Zero Emission Vehicle mandate, which sits outside this ministry's remit.
Tone
ProceduralTopics
Key actors
Chris McDonald, Liam Byrne, Secretary of State, Sir Chris Bryant, European Commission, Department for Transport, Department for Business and Trade
Notable line
“The UK-EU automotive industry functions as a single, integrated system and this interdependence strengthens manufacturing competitiveness on both sides of the Channel.”
Key Quotes
“The UK-EU automotive industry functions as a single, integrated system and this interdependence strengthens manufacturing competitiveness on both sides of the Channel. We have been clear that the UK must not get caught in the crossfire.”
“… we recognise the significant challenge that the 2027 Trade and Cooperation Agreement's rules of origin requirement will pose for UK manufacturers, particularly given the limited cathode active material (CAM) production in Europe.”
“CAM is a strategic priority for the UK's domestic battery value chain. Establishing a CAM manufacturing facility at scale in the UK would be a key enabler of economic growth and security …”
“We have committed over £4 billion to DRIVE35, which provides capital support alongside additional R&D funding for strategic vehicle technologies, including batteries and their supply chains.”
Source · parliament.uk record ↗