NEW DELHI, March 12 (Reuters) – Jaguar Land Rover (JLR) has ceased plans to build electric vehicles at a new $1 billion factory in southern India being developed by its parent company, Tata Motors (TAMO.NS), according to four sources familiar with the matter. The decision, which effectively suspends the project, stems from difficulties in securing EV parts that meet JLR’s standards for both price and quality. The move also reflects a broader slowdown in the demand for electric vehicles observed in the market.
The challenges in procuring components at the required price and quality has stopped all work on JLR electric vehicles in India, according to a supplier source.
Global automakers are reassessing and adjusting their electrification strategies in response to a variety of factors. These include intensified competition from Chinese manufacturers, a shift in consumer preference towards hybrid vehicles, and increasing flexibility from governments regarding emissions targets and EV sales goals.
The change in JLR’s plans is also set to affect Tata Passenger Electric Mobility, Tata’s local electric car unit. The launch of the first models of its premium Avinya series will be delayed, the sources said. These vehicles were originally slated to be built on the same platform as JLR’s electric vehicles with some components jointly sourced.
Construction of the new factory, which will manufacture both EVs and other vehicles, began in September. The plant is projected to have an annual production capacity of over 250,000 vehicles within five to seven years of reaching full capacity.
Initially, JLR had planned to manufacture over 70,000 electric vehicles at the new facility, with Tata’s EV unit set to build 25,000. The sources requested anonymity as they were not authorized to share the information with the media.
In a statement released to Reuters, Tata stated that the production timelines and selection of models to be built at the new Tamil Nadu factory will be consistent with Tata and JLR’s larger strategic objectives and prevailing market conditions.
Tata currently leads India’s developing EV market, but the company confronts growing competition from rivals such as JSW MG Motor and Mahindra and Mahindra (MAHM.NS), which have introduced new models that boast more features and extended driving ranges. Tesla (TSLA.O) is also finalizing strategies to launch EVs in India, the world’s third-largest car market that sees approximately 4 million vehicles sold annually. Currently, EV sales account for about 2 percent of overall car sales.
In November, JLR held a meeting with local suppliers in Mumbai to discuss its plans and the sourcing of local components. Some suppliers were asked to submit initial pricing information for components, but these talks have been suspended, according to the sources.
JLR primarily manufactures its vehicles in Britain, Europe, and China. However, some of its cars, such as the Range Rover SUVs, are assembled at Tata’s plant located in Pune, Maharashtra.
Tata’s EV unit had planned to finalize orders with specific suppliers by the end of January, but it is now adjusting the designs of its Avinya model because the economics of the project are no longer viable following JLR’s decision, two of the sources stated.
Tata previously delayed the launch of its Avinya EV to 2026-2027, from an earlier target of this year. It remains uncertain whether the current situation will lead to further delays.
Tata’s statement continued: “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.”
