Jaguar Land Rover halts EV production plans at Tata's $1B Factory in India

Jaguar Land Rover (JLR) has decided to halt plans to manufacture electric vehicles (EVs) at parent company Tata Motors' upcoming $1 billion factory in southern India, according to four sources familiar with the situation. According to Reuters, the British luxury car manufacturer struggled to find a suitable balance between pricing and quality for locally sourced EV parts, and this decision also reflects declining demand for electric vehicles.

"For India, all work on JLR electric vehicles has been suspended for about two months," said one supplier source.

As global car brands adjust their electrification strategies in response to intense competition from Chinese manufacturers, a growing preference for hybrids, and changes in government timelines for emission regulations and EV sales targets, JLR's decision is seen as a significant shift. This move is also expected to delay the launch of Tata Passenger Electric Mobility's first premium Avinya model, as both the Avinya and JLR's electric vehicles were intended to be built on the same platform, with some components to be sourced jointly.

Construction of the new factory, which will also assemble vehicles beyond just EVs, began in September. Once fully operational in about 5 to 7 years, the plant is expected to produce over 250,000 vehicles annually. The shelved plans involved JLR manufacturing more than 70,000 electric cars and Tata's EV unit producing an additional 25,000.

Sources who spoke to the media requested anonymity due to the sensitivity of the information. In a statement to Reuters, Tata reiterated that the production timelines and choice of models for the new factory in Tamil Nadu would align with the broader strategies of both Tata and JLR and respond to market needs.

As the leading seller in India’s emerging EV market, Tata faces increasing competition from rivals such as JSW MG Motor and Mahindra and Mahindra, who have introduced new feature-rich models with extended driving ranges. Additionally, Tesla is finalizing plans to enter the Indian market, which is the world’s third-largest car market, with about 4 million vehicles sold annually. Currently, EVs make up approximately 2 per cent of total car sales in India.

In November, JLR held a meeting with local suppliers in Mumbai to discuss its plans and the importance of locally sourcing components. While some suppliers were asked to provide initial pricing information for parts, those discussions are now on hold.

Most of JLR's production takes place in the UK, Europe, and China, though it assembles some models, like the Range Rover SUVs, at Tata's plant in Pune, Maharashtra. Tata's EV unit had planned to finalize orders with certain suppliers by the end of January, but is now reconsidering its designs since the financial feasibility of its plans is not viable without JLR's involvement. Consequently, Tata pushed back the launch of the Avinya EV to 2026-2027, changing the timeline from an earlier plan for this year. It remains unclear if further delays will arise from the current situation.

"As part of our rigorous product development process, we continuously evaluate key factors such as design, supply chain readiness, and unit economics to ensure a competitive and high-quality offering," Tata stated in its announcement.

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