How to get a government grant if you are an automotive company
Government grants don’t give away £10 notes, but they effectively sell them for £5 or less – and the process is easier than you might expect.
Over the past decade, hundreds of UK automotive companies have secured government grants to develop innovative technologies—proof that bold ideas can find funding.
A lot of companies assume that applying for a government grant to finance a new project is more trouble than it is worth. To put it bluntly, they think that the government would not recognise a good idea if it jumped up and bit them.
That may or may not be true, but governments employ independent people to assess grants that come from the industry and have a good record of knowing a good concept from a wrong’ un. They are also objective – there is no “magic circle” of favoured grant recipients.
Literally hundreds of automotive companies in the UK have received a grant in the last decade, so why wouldn’t a company want to follow their example?
So here is a quick guide.
How much can I get?
It depends – an SME with 10 people is not going to get far with a £5 million grant application. However, there are grants tailored for companies of different sizes. A small grant might be £60K, a large one might be £6 million or more.
What are grants for?
Most grants (except ATF and Innovate UK Loans) are for new technology. The government wants to develop and scale up bright ideas.
What grant should I apply for?
The table below shows the main recurring grants for automotive. There are also one-off competitions for specific areas of technology.
Do I have to start small?
Not necessarily – for a medium sized company, there is no need to start at the bottom. However, for an SME, the grants can form a ladder. We helped one start-up that went from Niche Vehicle Network through TDAP to APC in two years. That was £2m in funding within three years of their formation – and money they had never anticipated on Day 1.
How much does it cost to get a grant?
Obviously, the bigger the grant, the greater the paperwork. For a £60K grant, it might take us four days’ work, and for an APC grant around 20 days’ work. The biggest grants (e.g. ATF) are more like 30 days’ work.
How much does the client have to be involved?
We are effectively advocating on your behalf. We need to fully understand your product, your competitors and your ambitions. You need to brief us, and then help refine the arguments. The amount of involvement depends on the size of the client, as bigger companies will need to involve more of their people to sign things off. As a rule of thumb, you might spend one day on the grant for every four days that we spend on it. The one thing you need to supply is the data for financial forecasts – we are not your accountants.
Are all my costs covered by a grant?
With a very few exceptions, no. Most R&D grants are in the region of 50% - 70% for an SME, and 30% - 50% for a large company. Grants for major capex projects are much lower, as they are in line with state aid rules – 10% - 15%. You will need to fund the balance of the costs - and show that will be capable of doing so. That does not mean you need all the cash on hand on Day 1, but you need to show how you will generate enough money to pay your share.
Additionality
Odd word, but a hugely important one. Grants are to enable things that would otherwise not happen – i.e. they are additional to “business as usual”. Hence you can’t start a project until you have the grant. If you start something and then ask for a grant to finish it, the answer is no. The important thing is that you should think about a grant application when you are planning a new project. Once, you have started, it is too late.
Nationality
The ownership of the company does not matter in the slightest – it could be owned in Liverpool or Lahore. The only thing that matters is that the work is done in the UK and the project will benefit UK PLC.
Monitoring
Once you have got a grant, there will generally be a quarterly cycle. You will need to upload all your costs to the Innovate UK portal to make a quarterly claim (note: costs only count when the money leaves your bank account, not when you receive an invoice). There will usually be a quarterly meeting of 2-3 hours to discuss progress. This is usually reasonably benign – once the project has started, the last thing Innovate UK wants is a failed project.
Can you have too much of a good thing?
Yes – in the past some companies became “grant junkies”, more interested in chasing grants than implementing their own strategy. Innovate UK is wise to that now because, ultimately, it doesn’t help anyone. Grants are a means to an end, not an end in themselves.
Conclusion
Hundreds of UK automotive companies have successfully applied for grants. That means their cost of capital is a lot lower and their route to market is easier. Another bonus is that an Innovate UK grant can be a very good calling card – it means that your technology has been assessed independently and considered worthy of support.
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