A Jaguar Land Rover project to develop electric hybrid vehicle systems in partnership with universities will receive funding from a British government programme announced on Wednesday that aims to support the country’s automotive sector.

Verbius, a project run by JLR, which aims to improve the efficiency of electric hybrid vehicle systems, will receive matching funding from the government, as part of a £26.4 million investment into low-carbon projects at Ford, GKN and JLR. The government is also investing into an industry-led supply chain competitiveness programme to strengthen Britain’s supply chain ahead of the country’s exit from the European Union.

Britain’s automotive sector is facing the dual challenge of meeting the changes wrought by Brexit and the changing policy environment globally towards the internal combustion engine. Britain itself is committed to banning the sale of conventional diesel and petrol cars by 2040, spurring the industry to focus on pure-electric and hybrid alternatives.

“In the next 10 years, the sector will see more change than in the previous hundred. From the engines that power our cars, to the way we control them and our attitudes to owning them, technology is changing what the industry looks like and where money can be made,” said Business and Energy Secretary Greg Clark. “As we open the automotive sector’s next chapter, we will continue to work with industry to make sure the technologies of tomorrow are developed, tested and manufactured right here in the UK.”

The government said they acknowledged the benefits brought by the European market to the sector and that it aimed to achieve a new relationship “Free from tariffs” and “without friction to trade” that were essential to the sector. “Through the deal, government and the auto sector will work together to seize opportunities to do far more to engage with the wider world beyond Europe where there is untapped emerging innovation and opportunity.”

Implementation of the deal will be overseen by Britain’s Automotive council.

Mike Hawes of the industry body the SMMT welcomed the deal, which he said would help the sector deal with the many global challenges it faced. “In its implementation, the deal must help the industry build on our success and seize the opportunities presented by such technological innovations. Given current uncertainties, it must also be complemented by ongoing efforts to maintain the right conditions for growth,” he added.

The industry body has repeated warned of the need to maintain the tariff-free relationship with the continent, an essential part of the British automotive supply chain, and for clarity on both environmental and Brexit policies.

Earlier this week, The Times reported that JLR’s group sales director Andy Goss had expressed concerns over the “demonization of diesel” by the British government.

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