Jaguar Land Rover (JLR), announced on February 15 that Jaguar will be an all-electric car brand by 2025. This may not come as a revelation to those who recall a similar announcement made back in 2017, shortly after Volvo announced that it would slowly phase out internal-combustion cars.
This time however, Jaguar has a fairly detailed floor plan and unlike Volvo which aims to earn 50 percent of its revenue through the sales of e-vehicles, Jaguar aims to go fully electric by 2025.
The reasons for this move are three-fold, and Jaguar has shown considerable insight and initiative by taking such a drastic step. Especially considering that the brand has always been known for making performance-oriented cars, with a special emphasis on sensational design.
Struggling sales
However, Jaguar’s sales woes are a matter of public record. The brand’s year-on-year sales declined by nearly a quarter in 2020 alone. In fact, JLR’s global sales figures have been plummeting since 2018. Both the XE and the XF failed to successfully take on the Germans, and by the beginning of last year, Jaguar had experienced an 85 percent drop in sales in China alone—once their largest, most promising cash cow.
If there has been a silver lining in this perilously dark cloud, it’s come in the form of the Jaguar I-Pace (to be launched in India on March 9, 2021). Unlike its main competitors, Jaguar managed to get a head start with the all-electric I-Pace, which was a critical and relatively speaking, a commercial success.
Having won the coveted World Car of The Year award in 2019, the I-Pace was the first electric car manufactured by a mainstream carmaker to hold its own against Tesla’s offerings even though it failed to make a dent in the latter’s sales. Jaguar has also taken cognisance of the fact that, while Tesla continues to dominate the EV market, several other electric startups could evolve to occupy much larger chunks of the EV sales chart in the coming years. Brands like Rivian and Faraday Future show plenty of promise.
Jaguar wants to use this period of uncertainty and strife for the brand, as an opportunity in total reinvention. And with the I-Pace, it’s off to a solid start.
What is JLR’s reimagine strategy?
According to JLR’s latest “Reimagine” strategy, it will commit upwards of GBP 2.5 billion in the “development of connected services to enhance the journeys and experience of its customers”.
It’s also stated that it's ready with prototypes for both Jaguar and Land Rover which will arrive in 12 months. The move marks a major production overhaul for JLR as it moves its production facility from Castle Bromwich, near Birmingham, England, to Sollihull.
Land Rover is of course part of the plan, but unlike Jaguar, it will only add electric alternatives to its existing line-up of ICE (Internal combustion engine cars) which are likely to have some hybrid component to them. That is, until 2030, by which point even Land Rover will be a wholly electric brand.
So, is the move likely to spur other luxury carmakers into following suit? Not quite. Simply because they don’t intend to fix what isn’t broken. Mercedes-Benz for example, has announced that it will have a ready electric counterpart for each car in its portfolio, with 10 all-electric versions scheduled for launch by 2022, and a total of 25 in the works, to be launched by 2025.However, neither Mercedes-Benz nor Audi have announced any plans to completely phase out internal combustion cars by the end of the decade. Even BMW, which got an early start with the i3, has announced that only 50 percent of its lineup will be electrified by 2030.
If JLR has a close second, it’s General Motors, another ailing giant of the fossil-fuel powered era. Although no longer operational in India, largely thanks to its abysmal run in the country with wholly substandard production qualities, GM has pledged to completely electrify its line-up by 2035.
In the Indian context, the question arises, will Jaguar’s electric advantage translate into one for its parent company Tata Motors? While JLR CEO Thierry Bolloré has said their will be greater knowledge and data sharing, internally, the fact remains that India’s infrastructural shortcomings, are unlikely to be addressed before 2025, and despite rising fuel costs, a nation-wide network of DC chargers, remains a distant dreams.
According to the brand’s own brief, the move aligns them with the Tata Group’s greater vision of a sustainable future.
In reality, it will need Tata Motors' help in sharing production costs for batteries, and its high-end luxury car status will allow them to charge their customers a premium, and hopefully make a sizable profit. Because manufacturing electric cars is becoming a less expensive proposition with each passing year, with an estimated 18 percent annual reduction in prices, according to a report by BloombergNEF. Another report suggests that battery costs, since 2012, will have seen an 86 percent decline in costs by 2023.
For the moment, Jaguar Land Rover needs Tata Motors far more than Tata Motors needs Jaguar.