Jaguar Land Rover’s Speth: Keeping pace with EV demand
- February 28, 2017
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LOS ANGELES — Jaguar Land Rover CEO Ralf Speth has the British automaker growing at a record pace, but he wants to make sure the company always puts profits ahead of volume. Speth outlined the next steps in JLR’s model and plant expansion, which include the addition of a factory in Slovakia and outsourcing output of its Jaguar I-Pace electric crossover to contract manufacturer Magna Steyr.
Speth, 61, discussed JLR’s plans with Automotive News Europe Editor Luca Ciferri and Automotive News Print Editor Richard Johnson at the auto show here in November.
Q: How many vehicles will JLR produce this year, and when will it hit the 1 million-unit-a-year target?
A: We are going to grow in a profitable, sustainable way. Last year, we built 520,000 units, and we are growing. With all the political and economic changes, where we will end up this year, nobody knows. Also, the 1 million target is far away.
Can you provide details on what JLR will produce at its new plant in Slovakia?
No. We had the groundbreaking in September, so we are on track. The plant will be flexible, which allows us to produce different vehicles there. The planned size is about 150,000 units, but we have room to grow. With the amount of land we have, we could theoretically bring our three British production plants to Slovakia, but we don’t want to shift any production. We have quite a high capacity utilization in the U.K., and we want to maintain that.
How does Brexit affect JLR’s production strategy around the world?
In addition to the U.K., we have assembly lines in India, Brazil, and we just had the groundbreaking in Slovakia. Our overall strategy for the [production] footprint is not going to change.
You had predicted that the Jaguar F-Pace would not affect sales of the Land Rover Range Rover Evoque because the two vehicles are aimed at different customers. Has that been the case?
Yes, we don’t see a lot of cannibalization.
The new Jaguar XF will offer a wagon variant; the XE won’t. Why?
The XF wagon is a very attractive concept because SUVs are not for everyone. When it comes to having an XE wagon, we can’t do everything.
What’s the status of diesel in Europe, and what is its future?
About 97 percent of our sales in Europe are diesels. We will need modern, cleaner diesels that still emit 10 to 15 percent less CO2 than gasoline engines. Therefore, I think that if you want to achieve the real CO2 targets, diesel is necessary for every automaker. There is no other way.
Will JLR continue to offer diesel in the United States?
Sure. About 10 percent of our U.S. sales are diesels. The industry average there is about 3 percent.
When we spoke a little more than a year ago, you had a very negative opinion of electric vehicles. Now, Jaguar plans to debut an EV. What changed?
We try not to talk about things just for the sake of talking. We want to have something to show. Now is the right time to show our idea. We have created the I-Pace from a clean sheet of paper, with a different package and a different design.
What percentage of JLR’s global sales will be electrified by 2025?
Unfortunately, I don’t have a crystal ball. A lot depends on economic and political influences as well as the state of the charging infrastructure. But I assume that a high percentage of vehicles in the world’s biggest markets will be battery-electric vehicles by then.
Many of JLR’s German rivals say EVs will account for 15 to 25 percent of their sales by 2025. Does JLR have a similar expectation?
Maybe they have brighter teams who know everything better about the future. I can’t predict the future, so I can’t say whether things will go in that direction.
Will Jaguar have a higher EV penetration than Land Rover or vice versa?
No. Land Rover is also well-prepared to make battery-electric vehicles. There are some disadvantages for Land Rover, such as higher starting weight of SUVs, but on the other hand, the vehicles are taller, which is an advantage when it comes to finding space to put batteries.
JLR will buy cells from suppliers and assemble its battery packs. What about the electric motors?
At the moment, we buy the electric motors, but we have to think what we will do in the future.
When you reach a certain volume, it makes sense to build an internal combustion engine in-house, but for an electric motor, it’s not as clear at what volume it makes sense. Also, the electric motor is not that complex, so from a production standpoint, it’s not a challenge to make.
To what extent is JLR’s move into EVs driven by regulations, and to what extent is it driven by consumer demand?
It’s a move that is driven primarily by the customer. Customers see this type of vehicle as cool and sexy, especially younger customers who, unlike me, are not as interested in the sound of the engine and things like that. They have different interests because they have not grown up with this kind of experience. They are far more open to accept new propulsion systems.
Why has there been such a huge increase in interest around EVs when it seemed like they were dead 18 months ago? Is some of this backlash against Volkswagen Group’s emissions-cheating scandal?
Dieselgate helped a little bit, but I also have seen a sudden change in public acceptance. People are much more open to this change, therefore, the take rate will increase. The customer will decide what percentage of the vehicles in a carmaker’s portfolio will be EVs. I am also sure that customer demand will increase as the recharging infrastructure develops. If the infrastructure can keep pace with customer demand, we will quickly have a high percentage of battery-electric vehicles on the road.
Magna Steyr will build the I-Pace electric crossover in Austria. Will the second vehicle that Magna builds for JLR be a Land Rover EV?
We are just starting with the first vehicle, so I don’t want to speculate on the second one. We will, however, have a second vehicle down there because it doesn’t make sense to have just one.
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