Jaguar Land Rover’s current problems -- weakness in China, Brexit worries, customers’ flight from diesels -- are weighing heavily on its Indian parent company. In February, Tata’s share price fell 30 percent after the automaker reported a quarterly loss. Tata had to reduce the value of its British subsidiary by nearly $4 billion. There is speculation that Tata is looking into strategic options, including a sale of the British brands, and PSA CEO Carlos Tavares has expressed interest. JLR CEO Ralf Speth discussed these topics and more with Automotive News Europe sister publication Automobilwoche's publisher, Helmut Kluger, and editor, Burkhard Riering.
According to media reports, JLR parent Tata is looking into strategic options, including the potential sale of the company. Have there already been discussions on this?
That something you actually should ask the Tata supervisory board. But I can tell you this: There is no question that the Tatas are giving Jaguar Land Rover their full support. The Tata Group and Ratan Tata personally are very closely tied to Jaguar Land Rover.
After a number of strong years JLR is facing significant headwinds. What are your biggest challenges this year – other than Brexit?
The entire auto industry is on the brink of huge changes. Whether they are regulatory, economic, geopolitical or technological, they all have to be funded. We have been working on this for a while. Our current improvement program, which focuses on profitability and cash, has been underway since 2018. We are reducing investments and expenditures, eliminating complexity and tightening processes in many areas. We are getting down to business anywhere we can improve efficiency in the short term. We are also carrying out a separate program for systemic and strategic improvements in efficiency.
You are also going to cut jobs, right?
That is the most difficult part. That's another reason we started early. In 2018-19, 2,500 temporary workers were separated from the company, and at the start of the year, we launched a voluntary settlement program, which 2,500 employees have accepted. The measures were completed by the end of March so we could begin the new fiscal year on April 1 with a leaner organization. We know exactly what we are doing.
What problems are you facing?
First of all, we are investing massively in autonomous driving, networking and shared mobility. Secondly, we are renewing and expanding our product portfolio. Thirdly, we are optimizing all our internal combustion engines so we can continue to offer our customers outstanding products. Given the current challenges, that’s not easy. We would have liked to be in a different place at this point.
As demand for diesels and V-8 gasoline engines decline do you ever question your powertrain strategy?
No, definitely not. I believe we will continue to need this mix. According to industry forecasters, a global share of 20 percent to 30 percent for electrified vehicles is expected by 2025. When you turn this around, it means that 70 percent to 80 percent of all vehicles around the world will have conventional engines. Let me add that today’s diesels, which are absolutely CO2-efficient and clean.
Why is electric mobility still not important to consumers?
On one hand, the products are still too expensive. On the other hand, the infrastructure is still too inconvenient and unreliable, so electric cars tend to be for people with deep pockets.
The Jaguar I-Pace, which costs at least 78,000 euros, has been the object of considerable praise, but it has hardly any visibility in Germany. Does that hurt?
The I-Pace has received many awards, including the 2019 European Car of the Year. In fact, availability is tight in Germany and throughout the world.
Why is that?
When it comes to electric vehicles, the question isn’t how many cars I can build but rather how many batteries I can buy. The demand for batteries is so great that there will be a limited ability to deliver them over the next few years. And, unlike some others, I expect continually rising battery prices – at least for the next two to three years.
The new Defender is due in 2020. But there are reports that preparations for the production launch are running into difficulties. Is that true?
We were aware that the continuation of the Defender would not be an easy launch. Every vehicle launch is difficult. But a successor to an icon faces an exceptionally high bar.
Would it have made more sense to bring it out much earlier?
Certainly, I would have preferred to launch a new one immediately and seamlessly. But a new Defender has to be geared to its community of fans. It is better to take a hiatus so the new product has the right substance, specifications and characteristics. That’s what it will have.
What will the volume be for the first year?
We will see strong demand.