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The markets are abuzz with the promise of millions of new electric cars. Investors love the sound of anything green. In keeping with the trend, Jaguar Land Rover Automotive Plc — which is owned by India’s Tata Motors Ltd — announced an overhaul: It will go mostly electric in the next decade or so, setting aside £2.5 billion ($3.4 billion) annually for the move. The company promises to have net zero carbon emissions across the board by 2039. It’s a big, bold, green strategy for a company that has spent the last few years aggressively reining in its costs and investment spending. Still, with all the fanfare, it’s worth considering how realistic these plans really are.
As part of its “Reimagine†plan, the British carmaker has set ambitious timelines. Jaguar will be an all-electric luxury brand by 2025. Land Rover will bring out six purely electric vehicles, with the first model out in about three years. By 2030, it’s hoping around 60% of Land Rovers sold will be equipped with zero tailpipe powertrains. JLR is even preparing for clean fuel-cell power with prototypes expected to hit UK roads within the next 12 months.
These targets fit well with the ongoing electrification rhetoric but it isn’t yet clear how the company will get there. A planned battery version of the flagship Jaguar XJ luxury sedan that was announced in 2019 will not be part of the new lineup. Instead, the cancellation is expected to lead to a write-off of at least £300 million, the Financial Times reported, citing two people previously involved in the project.
Hefty investments over the last decade haven’t resulted in a fleet of electric models or outsize success for the firm. So far, JLR has only one fully electric vehicle — Jaguar I-Pace — and it’s made by a contract manufacturer, not in-house. In the quarter ended in December 2020, more than 50% of its sales were electrified but of that category, more than 40% were mild hybrids, cars that can’t be plugged in and can’t be powered by their electric motors alone. They typically aren’t seen as fuel efficient.
Turning gas-guzzling sports utility vehicles like the company’s iconic Land Rovers into electrics requires expensive, dense and large batteries along with more motors. It promises the first all-electric model of the Land Rover in 2024. A number of upstarts, including investor-darling Rivian
Automotive Inc, are working on green SUVs and planning rollouts sooner. What will matter most is how JLR manages profitability through its green transition. The company’s focus on generating free cash flow and reducing debt “led by cost cuts and slippage of market share†in key regions “point to the challenging business outlook for JLR,†Goldman Sachs Group Inc analysts said in a note. The company announced it was laying off 2,000 workers.
—Bloomberg