It's a risky move, but JLR's small size and agility might just make it work.
To run a car maker, even one as small as Jaguar Land Rover (relative to giants like Toyota and GM), is to play chess in the big leagues. Each move a company makes requires predicting changes in markets and societies decades down the line, which is why manufacturers like Volkswagen and Toyota are consolidating their lineups and modularizing their platforms - doing anything to cut costs really - to prepare for the expensive transition into the electric car era. Some, like Honda and General Motors, are even partnering up to work on battery technology, acknowledging that EVs aren't profitable yet and that it's better to split the research and development bill until they are.
All of that, however, assumes that the transition to electric cars requires a top-down approach from the industry's biggest automakers. But as Jaguar Land Rover CEO Ralf Speth recently told Auto Express at the Financial Times Future of the Car Summit in London, his company doesn't see things quite the same way.
Speth was upfront about his aims for JLR: for the time being, the automaker does not want to seek partners to help it improve on its battery technology. Instead, Speth thinks JLR's relatively small size and agility give it the upper hand it needs to thrive during this transition. "I guess I see it in a different way," said Speth. "You can talk about economies of scale and that's correct. But on the other hand, there's the freedom we have to develop and do our own strategy in a fast way, a structured way. This gives us a lot of power."
Proof of Speth's point can be found on dealership lots where the electric Jaguar I-Pace is on sale while competitors from Mercedes, BMW, and Audi are nowhere to be found. "In the UK we're a big company, but in international terms we're small, a design house," said Speth. "We deliver outstanding vehicles to special customers. Being small and nimble is also an opportunity to be agile; the I-Pace shows this best."
There's another good reason for Jaguar Land Rover's thinking, however, and it proves that Speth and his company are making moves with the foresight of an experienced chess player. That reason is batteries, or rather, the lack of them. "The supply of batteries is limited," said Speth. "That means that for the next two to three years, I don't think we'll see a cost reduction. Even more so, I think the cost of batteries will go up. The whole of the industry thinks they'll go down but at the moment demand is higher than supply - so the normal economic law applies. It's only when supply catches up that costs will go down." How JLR will factor that into its plans, or into the cars that will eventually bolster the EV presence the I-Pace brings to its lineup, is something we'll have to wait to see. That's only if Jaguar Land Rover manages to stay alive for the next few years, of course.