Electric Jaguar May Gamble On Risky Move Upmarket After Self-Imposed Limbo; Report

While Jaguar reimagines its future, there’s a danger potential customers may have forgotten about the storied but ailing sports car maker by the time new, all-electric models appear in 2025. And they will need to be much richer too.

CEO Thierry Bolloré has been at the helm of Tata Motors of India-owned Jaguar Land Rover (JLR) for more than a year now and in 2021 the company said it planned “reimagination of Jaguar as an all-electric luxury brand from 2025 to ‘realise its unique potential’”.

To be fair it also said the same “reimagining” process would apply to the Land Rover SUV  business, but this part of the JLR operation has been thriving over the years and will also be subject to a slower process of electrification than Jaguar, and its place in the marketplace looks secure.

Jaguar has been treading water at best, and its model range was badly dented when Bolloré cancelled the almost production ready flagship XJ electric sedan at a reported cost of around £1 billion ($1.4 billion), and the big J-Pace SUV also received the black hat treatment. That leaves Jaguar with the XE, XF sedans, E and F-Pace SUVs, I-Pace electric SUV and F-type two-seater sports car. The sedans will remain through this year and the ICE SUVs until 2024. The I-Pace will go on though. JLR has declared Jaguar to be all-electric from 2025, but hasn’t provided details of vehicles, prices or sales targets.

French auto consultancy Inovev said Jaguar’s new target market after 2025 will be the exotic and high-priced world of Bentley and Rolls-Royce, selling far fewer vehicles than now but at much higher prices and profits, in theory.  

“The idea would be to produce between 10,000 and 20,000 cars each year at prices above €150,000 ($170,000), while today the list prices range from €45,000 ($51,500) to €130,000 ($149,000) at the carmaker. It means that the electric I-Pace, which anticipates the future battery electric range from Jaguar, would be a far too affordable model compared to the future range, as its price does not exceed €80,000 ($91,500),” Inovev said in a report.

Jaguar volume was just over 100,000 in 2020. Sales dropped nearly 16% last year.

“This ambitious strategy could turn out to be risky because the hibernation of Jaguar until 2025 could turn away a large part of the brand’s customers towards the competition and experience shows that it is very difficult to recover lost customers after a few years. On the other hand, it is also difficult to win over customers in a very high-end market already in the hands of traditional, well-known and well-established brands. Finally, the years 2022-2024 are likely to be difficult for the sales network, which will see its orders drop drastically,” Inovev said.

This is a high-risk strategy but at least it has the advantage of moving Jaguar out of a rut which it seemed unable to extricate itself. For a start, although the new electric car range hasn’t been detailed, it is unlikely to cannabilize Land Rover SUVs, which happens now with the E and F-Pace. It also moves Jaguar away from what it found to be the impossible task of competing with the leading German premium makers BMW, Mercedes, Audi and Porsche. Jaguar never had the volume to allow it to match them in choice, price and profits.

Investors have long pondered the future of JLR as whole. Would it be big enough to ever compete with the much bigger and more cost competitive opposition like BMW, Mercedes and VW’s Audi? Would Tata decide to sell off Jaguar or all of JLR?

The question of who would buy JLR or just the Jaguar bit stumble on the possibility of a candidate. BMW has an arrangement with JLR on electric engineering but given its ill-fated flirtation with Britain’s Rover in 1994, it’s unlikely to want a repeat. Groupe PSA was thought to be interested, but after its merger with Fiat-Chrysler to form Stellantis it has a huge task of rationalizing all the brands to have time for JLR or just Jaguar. Chinese companies eager to emulate Zhejiang Geely Holding of China’s successful takeover of Volvo of Sweden might want to step in, but Tata Motors is unlikely to sell to the Chinese.

CEO Bolloré has said it will look outside JLR for partners to develop the new range of Jaguar electric cars. Land Rover will get its first all-electric vehicle in 2024. JLR has 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.  In 2020 sales fell 24% to 426,000, including about 324,000 Land Rovers.

Analysts say Jaguar is a little like Alfa Romeo, now part of Stellantis, which a lot of people find attractive and appealing, but ultimately go elsewhere. They don’t expect Tata to dispense with it in the short-term, not least because it’s not obvious who would want to buy it. Others even think JLR itself is too small to survive.