A new report has revealed that the UK’s electric vehicle battery sector is attracting record levels of venture capital investment.

The report, commissioned by UK Research and Innovation’s (UKRI) Faraday Battery Challenge, showed that 2023 was a strong year for the UK EV battery market, with $1.3 billion (£975.9 million) of private investment in EV battery start-ups.

UKRI claims that the UK now ranks as the fourth largest EV battery VC investment recipient since 2018, following the US, China and Sweden, with UK-based EV battery startups having raised over £2 billion in funds over six years.

The Faraday Battery Challenge has supported 52 UK startups, valued at over £1.5 billion and raised over £750 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 and employing 2,400 people across the UK, with close to half of UK EV jobs being created by startups founded in the last 10 years.

The report reveals that the leading area for venture capital investment in the UK since 2018 is EV battery recycling and second use, with over £900 million raised. The findings highlight a significant increase in investor demand, both in the UK and globally, over the past five years.

Signs of healthy investment in the UK EV battery sector come at a critical time for the industry, as 17.9% of the UK EV market sales now consist of battery-powered EVs, as of May 2024.

According to the report, that leaves the UK within reach of hitting the Zero Emissions Vehicle (ZEV) mandate, which says that 80% of new cars and 70% of new vans sold in the UK will be zero emission by 2030, increasing to 100% by 2035.

UKRI sees the ZEV mandate as a key factor in maintaining investor interest in advancing EV battery technology, with the industry looking to build on the recently hit milestone of surpassing one million electric vehicles on UK roads.

Recommended reading

• Government Launches New Measures to Hasten EV Charger Rollout
• Is Infrastructure Keeping Apace With EV Adoption?
• Could the Cyber Threat to EV Charging Points Slow Adoption?

Thomas Bartlett, deputy challenge director at the Faraday Battery Challenge, said: “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, as we have seen Faraday Battery Challenge-funded startups and scale-ups raise over $1.6 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.”

According to a report from the International Energy Agency (IEA), more than one in five cars sold globally this year are expected to be electric, reaching around 17 million, with demand for electric cars continuing to accelerate over the next decade.