Jaguar Land Rover (JLR) and BMW have become the latest car manufacturers to tacitly admit that the demands of maintaining viable businesses while investing huge sums of money into developing the technology for new generations of electric vehicles are too weighty to take on alone. The British luxury car maker now owned by India’s Tata Motors and the German giant of upmarket vehicles have announced a new partnership that will see them share R&D, production planning and team up on joint orders for electric vehicle components.
JLR’s chief executive Ralf Speth spent 20 years at BMW before taking up his current position with the Coventry-based automaker. That relationship will have undoubtedly helped bring the two companies close enough together to agree on the tie-up. It mirrors a comparable partnership recently struck between Volkswagen and the USA’s Ford, who will also develop electric vehicles together. Fiat Chrysler and Renault have also been discussing a $35 billion merger with a view to the economies of scale today’s auto titans feel they need to survive.
The JLR and BMW deal with focus on the joint development of electric motors, transmissions and power electronics specifically. Both companies have had relative success with their electric vehicle models to date. BMW launched its first all-electric models back in 2013, the urban ‘run-around’ i3 and i8 sports model. Both have been well received and BMW is considered one of the ‘best in class’ automakers within the electric niche.
JLR’s first foray into electric was last year when it launched its I-Pace. It has also been well-acclaimed by car reviewers and customers. Despite that early success the company knows it is years behind its industry’s biggest players when it comes to cost-efficient supply and production lines and the ability to develop and release whole ranges of electric vehicles.
Nick Rogers, JLR’s engineering director commented:
“The pace of change and consumer interest in electrified vehicles is gathering real momentum and it’s essential we work across industry to advance the technologies required to deliver this exciting future”.
“We’ve proven we can build world-beating electric cars but now we need to scale the technology to support the next generation of Jaguar and Land Rover products.”
The demands being made on automakers by regulators to speed up their transition towards zero and low-emission models are a heavy burden when it comes to R&D spend. That putting pressure on margins is one reason why the industry is currently going through a period of consolidation. The other is executives casting an eye towards a driverless future and how that is expected to shake up their industry within the next decade or so.
Analysts believe that when driverless vehicles technology is perfected and regulation catches up, the era of personal car ownership will be at its end. Rather than individuals and families having their own cars in the driveway or garage, they will simply have app-based subscriptions, with a driverless vehicle picking them up within minutes at the touch of a button. Not having to cover the cost of a driver, and vehicles able to be in more or less constant operation when not being given technical check-ups or charged will mean the cost of operating fleets of driverless vehicles will allow for subscription models that mean personal ownership of a car will no longer make economic sense for the average driver of today.
Car manufacturers are looking to a future where their business model will not be selling vehicles to private buyers but to tech giants operating these driverless fleets. Or operating them themselves.