Case Study- Jaguar Land Rover (JLR)

All Jaguar cars and six out of every 10 Land Rover models will go electric by
2030 as the UK subsidiary of Tata Motors ditches the combustion engine in
favour of the zero-emission technology as part of its ‘Reimagine’ strategy.
The plan is crafted by JLR’s newly-appointed chief executive officer, Thierre
Bollore, where the company will invest about 2.5 billion pounds ($3.5 billion) a
year into electrification and related technologies. The Land Rover line will get its
first fully electric model in 2024, and by the following year, all Jaguar models will
be entirely powered by batteries.
“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 realise its potential, reinforce Land Rover’s
timeless appeal, and collectively become a symbol of a truly responsible
business for its customers, society and the planet,” N Chandrasekaran, chairman
of Tata Sons, Tata Motors

Tata Motors investors cheered the announcement. The company’s shares closed
at Rs 333.30 a piece on the BSE. “The electrification strategy augurs well for the
company and will translate into enhanced appeal for its models globally." said
Mitul Shah, head of research at Reliance Securities.

CEO Bollore has said it will look outside JLR for partners to develop the new
range of Jaguar electric cars.
JLR abandoned its target of annual sales of 1 million and is now trying to be
profitable selling between 400,000 and 450,000 vehicles a year. Last year, sales
fell 24% to 426,000, including about 324,000 Land Rovers and just over 100,000
Jaguars. This makes various stakeholders question the viability of this heavy
investment in EVs. JLR also failed to comply with Europe’s tougher carbon-
dioxide rules last year and set aside 35 million pounds to pay for the resulting
fines. The UK, its home market, will ban sales of gasoline and diesel cars from
2030, putting further pressure on legacy carmakers.
While JLR will retain its plant and assembly facilities. The company is looking at
opportunities to repurpose its plant in England, which makes the XE and XF
sedans as well as the F-Type sports car. The site will produce the models until
they’re phased out, Bollore said on a call with reporters.
The worker Union has broadly welcomed JLR’s strategy, which does not include
plant closures or compulsory job losses.

Competitors:
Bentley Motors- a competitor to Jaguar also announced that its range will be fully
electric by 2030. A few others such as the BMW group owned Rolls-Royce has
also committed to electric vehicles.

Bollore’s decision to shift JLR away from the internal combustion engine (ICE) is
prompted by stricter emissions rules. Global carmakers from Volkswagen AG to
Jaguar’s smaller rival Lotus Cars have been veering away from ICE and have
announced plans to electrify their offerings. Governments around the world are
stepping up incentives for battery-powered vehicles and restricting gasoline cars.

One might consider whether after 2025 being an EV-only brand will be the huge
differentiator it has been for Tesla during the past decade, unless it can bring
something hugely different, considering Governments around the world are
putting into place stricter guidelines for carbon emission.

Further, Tesla has established itself as a first mover, while JLR will compete with
much larger brands such as BMW and Mercedes who have also set their sights
on EVs. Experts opine that perhaps a partner in the tech world would be
beneficial to JLRs vision such as Apple or even Google.
British car maker Daimler will finish this year with four new electric vehicles (EV),
Sweden-based Volvo has plans to unveil one new model every year until 2025,
whereas the German carmaker Audi is confident that by 2025 one in every three
cars it sells will run on batteries.

On the other hand, Jaguar Land Rover (JLR) currently has one electric car in its
stable, the Jaguar I-Pace. The company plans to launch its first new energy
vehicle in 2024. By then, its rivals BMW, Daimler and Volvo would have blazed
past with 12, 4, and 4 new electric vehicles, respectively.
New energy vehicle refers to a class of both plug-in electric vehicles and hybrid
electric vehicles. JLR’s parent company, the Mumbai-based Tata Motors itself
has two EV models out in the market currently, Tigor and Nexon.
Jaguar Land Rover (JLR), one of the marquee brands among luxury car makers,
has been quite slow in making a pivot to the era of EVs. “About 38-40% of global
EV sales are premium; of which JLR’s market share is less than 1%,” pointed out
a report dated August 20 from, an Indian broking firm- NB Associates.
JLR has negligible presence in China, which is the most profitable market when it
comes to electric vehicles. Its rivals, Volvo and BMW, together had a share of
nearly 20% in terms of new energy vehicles in 2020.

Supply Chain:

Lithium-ion batteries are an essential part of our everyday lives: they power our
phones, laptops, tablets, and electric vehicles (EVs). Demand for lithium in the
form of lithium carbonate and lithium hydroxide – key ingredients in these
batteries – are rising rapidly: up almost 20% in 2019. Prices doubled between
2016 and 2018 in anticipation of increased demand brought on by the EV
revolution.

Global EV sales broke 1.2 million units in 2017 and grew to more than two million
units in 2018: an increase of 63% on a year-on-year basis.

Jaguar Land Rover is pausing the production of its I-Pace electric SUV as is
Mercedes of its EV due to the unavailability of certain key ingredients for
batteries – including lithium and cobalt. Audi and Jaguar both source their
batteries from a Polish factory owned by South Korean battery giant LG Chem.

The EV battery supply chain faces a number of obstacles including high costs
and environmental concerns associated with the extraction and processing of key
metals.

Cobalt mining, for instance, is concentrated in one country — the Democratic

Current trends suggest a shortage of raw cobalt in the future: the current capacity
to mine will not be able to meet growing demand. According to an MIT study,
demand for the metal is only expected to increase while supply would not shift
substantially. MIT’s Olivetti Group calculated only a marginal increase in supply:
from 149,000 tons in 2017 to 160,000 tons in 2023. This could lead to
unsustainable price spikes.

Lithium, on the other hand, does not face mining shortages. Rising prices of the
core battery material caused a lithium rush in Australia, Argentina, and Chile.

With lithium-ion batteries becoming an essential part of modern life and a crucial
step to decarbonizing the global economy, supply chain issues around crucial
components may endanger the rise of electric cars.

Reference material-
1) Tata Motors is the parent company of JLR- This means that they own a
majority of the share capital of JLR. This makes JLR the subsidiary.
2) A worker Union is an organization of workers formed for the purpose of
advancing its members' interests in respect to wages, benefits, and
working conditions
3) Supply chain management (SCM) is the art of managing and controlling
the sequence of activities from the production of a product to it being
delivered to the final customer. SCM is about planning and organizing
production and distribution of a finished good. It includes overseeing the
movement and storage of raw materials, semi-finished goods, and finished
goods, from the point of origin to the point of consumption of the final
product.