Jaguar Land Rover (JLR), known for iconic sports cars and off-road sport-utility vehicles (SUVs), will turn its entire portfolio electric starting from about four years from now.
The dramatic shift in the Tata Motors Ltd unit’s corporate strategy underscores how automakers worldwide are scurrying for ways to adapt their businesses as emission norms tighten worldwide.
JLR chief executive officer (CEO) Thierry Bolloré, the former Renault CEO who took charge in September, said the new ‘Reimagine’ strategy will enable the British automaker to post double-digit operating margin—earnings before interest and taxes (Ebit)—and achieve positive cash flow in four years.
The company will invest about £2.5 billion a year to drive its electrification plans, develop connected services, and data-centric technologies for its luxury vehicles.
As part of the new strategy, Jaguar will be repositioned and redesigned as an all-electric luxury car brand by 2025. Land Rover will also evolve as a maker of luxury electric SUVs with six pure electric variants of its Range Rover, Discovery and Defender models set to be launched in five years.
Electric vehicles (EVs) will make up 60% of Land Rover’s annual sales by 2030 and JLR will cease production and sales of combustion engine vehicles by 2036 as part of an overarching aim to become a ‘net zero carbon business’ (carbon neutral) by 2039.
“We will reimagine Jaguar as a pure luxury EV brand with a new portfolio of emotive designs and next-generation technologies. We will reinforce Land Rover’s lead in luxury SUV segment with the purity of electrification. Two brands, two distinct personalities, connected by the elements of quality and sustainability that underpin JLR’s future of modern luxury by design,” Bolloré said in a virtual press meet on Monday.
He said the revamped strategy will provide a clear road map for both Jaguar and Land Rover and, overall, the company will become more agile with a more simplified manufacturing process while improving synergies in various areas of mobility with other companies of the Tata group.
To be sure, JLR already sells fully electric, plug-in hybrid and mild-hybrid vehicles but the latest plan underscores its ambition to leapfrog its bigger German rivals BMW AG, Audi AG and Mercedes-Benz and others who are also developing green cars.
In addition to betting big on electric battery technology, JLR also plans to develop electric cars that run on hydrogen fuel cells and start testing vehicle prototypes in the UK within a year. So far, Japan’s Toyota Motor Corp. and South Korea’s Hyundai Motor Co. have invested heavily in hydrogen fuel cell technology as an ultimate replacement to lithium-ion battery-driven EVs.
“JLR’s announcement augurs well as electrification is the need of the hour and that would help the company compete with other automakers in the coming decade. Moreover, the target of generating double-digit Ebit margin would help reduce net automotive debt and improve cash flow going forward. This would also result in expansion of Tata Motors’ valuation,” said Mitul Shah, head of research, Reliance Securities.
According to JLR, ‘Reimagine’ will see the company “right-size, repurpose and reorganize” into a more agile operation. This will see the company substantially reduce and rationalize its non-manufacturing infrastructure in the UK.
In the past few years, JLR has been seeing a decline in vehicle sales in key markets—China, Europe and the US—amid a global slowdown, introduction of stricter emission norms and shift in customer preference towards EVs. The pandemic compounded the woes of Britain’s top carmaker.
The company began a major cost-saving programme—Project Charge—to boost cash flow and profitability.
Sales of JLR vehicles fell 9% from a year ago in the December quarter to 128,500 units though it rose sequentially by 13% due to a revival in demand in China, its single-largest market.
“The Reimagine strategy takes JLR on a significant path of acceleration in harmony with the vision and sustainability priorities of the wider Tata group. Together, we will help Jaguar realize its potential, reinforce Land Rover’s timeless appeal,” said N. Chandrasekaran, chairman of Tata Sons, which controls the Tata group.