Once again, recent news events prove that I am an extremely powerful sorcerer. Barely a month after I openly wondered if Jaguar was a dead brand walking, the British luxury icon is out here hyping a big new reinvention that will be all-electric, “exuberant and fearless,” and also more expensive. Can this upcoming investment save a brand that’s been relegated to the “Where are they now?” file in recent years? Also on tap for today’s morning news roundup: Elon Musk had a crappy week, the auto sector is showing signs of slowing down a bit and Stellantis is also looking into e-fuels.
Jaguar’s Badly-Needed Comeback Takes Shape
While everyone in Great Britain was getting just dreadfully upset about the news that Land Rover would downplay that central name to focus on the Defender, Range Rover and Discovery brands, the Galaxy Brained among us wondered what the hell was happening to Jaguar. You know, the brand that spent much of the 2010s trying unsuccessfully to beat BMW at scale and last gave us a new car when Beyoncé’s Lemonade was the hottest album out there. Yes, really. It’s been a minute.
Don’t get me wrong; I liked a lot of Jaguar’s efforts in the last decade and gave them high marks at the time. I was kind of lukewarm on the midsize XE, but I always respected the larger XF (especially in Sportbrake form; it’s incredible that car was sold over here at all) and F-Pace crossover. Plus, the F-Type sports car may now seem old enough to buy its own cigarettes, but I’d still cancel a lot of plans to spend an afternoon in one.
The problem is, beating BMW at scale didn’t work; the car-heavy lineup didn’t click in an SUV-dominated world, particularly when buyers could get plenty of those by walking a few feet over to the Land Rover side of the showroom; and the early electric lead it had with the I-Pace never really went anywhere. So the Jaguar we have today is kind of stagnant, struggling for relevance and replete with dealers ready to cash out.
Does Jag throw in the towel, or does it put on its big-boy pants and get to work? It seems the latter, and we’re finally finding out how, according to Automotive News. The brand had reporters over to the company’s headquarters in Gaydon last week and it told them the plan is to go all-electric and much more upmarket, like Bentley. Jaguar will kick this off with a battery-powered four-door that seems tentatively dubbed the Grand Tourer:
The car will be the brand’s fastest model to date and will cost more than 100,000 pounds ($124,200) as Jaguar moves more upscale into the ultraluxury space of brands such as Bentley. It will have a range of up to 700 km (320 miles).
[…] Future Jaguars will tap into the iconic styling of models such as the E-Type but they will be radically reimagined, [Gerry McGovern, JLR’s Chief Creative Officer] said. “They will shock and they will be fearless,” he said.
While I reserve the right to roll my eyes at the idea of yet another six-figure luxury EV sedan/crossover/touring car whatever—the really interesting stuff is happening in the cheap electric space these days—my cynicism gives way to excitement over whatever Jaguar has in store here. A high-performance, almost E-Type-inspired EV to herald the brand’s comeback? Count me in. And we know from the I-Pace that this company can pull off EVs when it tries. [Editor’s Note: I dunno; this is becoming a crowded segment. It’ll be tough (perhaps more so than ever) for Jag to stand out. -DT].
The GT will be the first of three all-new electric Jaguars, likely part of a smaller but more expensive and more focused lineup of cars. I’m rooting for Jag here. Let’s hope they can pull this off. Not every brand is going to survive this electric and digital transformation but I’d rather live in a world with Jaguar than not.
Elon Musk Has Had A Rough Week
At this point, I do think it’s unwise to bet against Tesla. The playbook it pioneered is being copied by the entire auto industry, which is something I certainly didn’t see coming back when Jaguar was spending all of its time picking fights with BMW, for example. But the guy up top at Tesla can be both its greatest asset and its most dangerous liability.
Last week was a garbage one for Elon Musk, as The Verge recaps. That meant weak Q1 results at Tesla; a SpaceX rocket explosion; and an utterly disastrous and widely mocked launch of paid “blue check” verification at Twitter. (If you have no idea what the latter is, I envy you.) From that story:
Elon Musk’s coffers became a smidge lighter on Thursday after his net worth plummeted by $12.6 billion, according to Bloomberg’s Billionaires Index, the biggest drop in Musk’s wealth so far this year. That fall comes on the heels of a fairly tumultuous 24 hours for SpaceX, Tesla, and Twitter, three of the largest businesses under Musk’s leadership.
Don’t you just hate it when you lose $12.6 billion in a matter of days?
Now, I’ll be fair here. The SpaceX explosion was unfortunate, but rockets explode all the time during the test phases like this and even NASA said as much. And Tesla’s revenue declines were rough, but also expected given the rapid-fire price cuts and it was one of the only cards Tesla had to play to keep demand up with its aging lineup and rapidly encroaching competition. Turns out that when you charge less for a product, you generally make less money. Maybe I should’ve been an MBA.
But the Twitter stuff remains a huge unforced error on Musk’s part. After saying he’d buy the company, he apparently only went through with it because he had to, and rather than install a like-minded CEO to report to him, he chose to get into the weeds himself, personally, and spend his time doing dumb stuff with blue checks, among other things.
So what does this have to do with cars, you ask? Well, a bunch of Tesla investors are getting upset about all of this, perhaps more loudly than they ever have before. Bloomberg reports those investors sent a letter (which you can read here) to the board and want to meet to discuss Musk’s performance:
The 17 shareholders, who hold more than $1.5 billion of Tesla stock, said Musk is distracted by his commitments to other companies and must be reined in, according to an open letter they sent to Chairwoman Robyn Denholm and Director Ira Ehrenpreis on Friday. They want the board to come up with a plan to do so and seek to remove directors too closely tied to the CEO.
“There is collective frustration,” said Ivan Frishberg, the chief sustainability officer for Amalgamated Bank, a union-owned bank that has 722,070 shares in Tesla across its various funds. “Over the last year, it became quite clear that Tesla suffers from a governance problem.”
[…] “It is unprecedented to be a CEO and also be running two other companies at the same time,” said Courtney Wicks, executive director of Investor Advocates for Social Justice, which represents several faith-based investors. “I can’t imagine any other board allowing a CEO to have as many outside business activities.”
Musk is no stranger to overworking and stretching himself thin. That, and insane deadlines on wildly unrealistic timelines, are some hallmarks of his leadership. But he’s still human after all and he’s not getting any younger. All of that, coupled with the infamous relentless micromanagement of his businesses, is making people wonder if he’s taking his eye off the ball too much at Tesla as the EV competition heats up across the board (There’s a whole section of that open letter titled “The Board has failed to ensure that the CEO is appropriately focused on Tesla.”)
A ‘Darkening’ Outlook For Autos Could Spell Bad Economic News
It’s hard to describe, or understand, the economic weirdness we’ve been in for a while now. Post-pandemic supply chain issues are still prevalent, and layoffs have been rampant in numerous sectors including tech and media, but there are few obvious traditional indicators we’re in a full-blown recession. And those who predicted one in recent years haven’t been proven right yet. Hopefully, they’re wrong and they’ll stay wrong.
But auto sales, along with home sales, are a good measure of strength for any economy. If people aren’t buying cars and they aren’t buying homes, you’re generally boned. Bloomberg also looked at Tesla’s declining sales, rising auto loan default rates and slower car purchases across the board, and folks, it just doesn’t seem great:
In recent months, Elon Musk’s electric-vehicle maker has repeatedly cut prices to lure reluctant buyers. Auto-lending giant Ally Financial Inc.’s first-quarter profit took a hit as it made fewer loans and set aside money for defaults, and dealers AutoNation Inc. and Lithia Motors Inc. sold fewer cars, trucks and SUVs. What’s more, auto loan delinquencies are rising.
Together, they paint a worrisome economic picture. Auto companies typically struggle during downturns when people balk at making big-ticket purchases. This time, the situation could be even worse as businesses and consumers are also grappling with stubbornly high inflation and steeper borrowing costs. Retail sales slid in March by the most in four months, and a slowdown at auto dealers played a big part.
[…] “The recession scenario is on,” New Street Research analyst and long-time Tesla bull Pierre Ferragu wrote in a note Thursday. He said he expected the company’s margins to decline further this quarter, before recovering slowly in the second half of the year, and noted a “steep drop” in auto demand in China and signs of economic weakness globally.
Part of me is hesitant to glean too much from all of this. New cars are too damn expensive, Tesla’s demand is slowing in part because the lineup is getting old, and neither scream “full-blown” recession to me. So I’ll choose to believe this analyst instead, if only because I had enough fun in the last recession and I’m good to sit this one out:
“Everyone is looking for a sign the economy is falling off a cliff; we are heading toward the cliff but I don’t see it yet,” said Bill Zox, portfolio manager at Brandywine Global Investment Management. “It is pretty hard to draw any firm conclusions on the broader economy based on what we have seen so far in autos.”
Here’s hoping. But even if it’s not a sign of bigger trouble to come, the auto industry alone does seem poised to face more headwinds soon.
Stellantis Also Eyes E-Fuels To Keep ICE Alive
Not everybody is thrilled that the auto industry seems poised for a battery-electric-focused future. Synthetic e-fuels are seen by some as a way to save internal combustion engines; but critics say these fuels are expensive, hard to make and only carbon neutral when produced with complex carbon capture procedures.
Still, Germany fought hard to get them included in new European emissions rules and Italy joined the fight as well. Now we learn from Reuters that mega-conglomerate Stellantis is also experimenting with these fuels:
Stellantis, owner of brands including Fiat, Peugeot, Opel and Jeep, said in a statement it was testing everything from tailpipe emissions to engine power and oil dilution in Euro 6-standard vehicles made from 2014 and into 2029.
Solutions being tested could apply to up to 28 million Stellantis vehicles, with a potential reduction of CO2 emission in Europe of 400 million tons from 2025 to 2050, it added.
“The broad adoption of eFuels would offer customers with existing internal combustion engine vehicles an easy and affordable option to decarbonise their vehicles.”
Stellantis reaffirmed it was committed to all new car sales in Europe being battery-electric by 2030.
CEO Carlos Tavares said last month that the e-fuels vote did not change the carmaker’s electrification strategy but showed that not everybody agreed with a “dogmatic approach”.
“The industry will have to demonstrate that this is carbon-neutral,” he said.
And Tavares—whom it should be a note is a kind of begrudging EV skeptic—is right that the auto industry will have to prove e-fuels are worth a damn amid these rapid investments in batteries and charging.
But in theory, these fuels could be viable for reducing carbon emissions among the millions of ICE cars that will remain in service for decades to come, and on a smaller scale, to keeping classic cars on the road. But it’s a technology that remains in its absolute infancy. To anyone hoping e-fuels will save the engine on a long-term basis, I say don’t get your hopes up.
Is it too little, too late for Jaguar? Or does the brand have a real shot at survival by going upmarket and electric?
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All I can say is our I Pace is the finest automobile I’ve owned. I’m now hooked and am looking for a low-miles, late model XKR before all ICE are outlawed.
Jaguar: Going up the price ladder in EVs? Maybe.Is there really enough volume in that space?
In any case, making something gorgeous like the original E-type is good.Just dont screw it up! There’s a fine line between awesome and awful.
Musk: So the rich partners are finally revolting? Finally.I bet they dont make big enough changes though.I hope i’m wrong
BTW if anyone is interested in rockets,Scott Manley has an extremely good breakdown of the failed launch on youtube. He mentions a few things no one else seems to have noticed.
Perfect time for Jaguar to escape its cromulant history. EVs are for a new segment of driver. But everyone has seen or heard Jaguar and not for its crappy rep. If they go all in. Dont let Brits coming back from a 6 warm beer lunch put the cars together under a steel union protection that ensures constant repairs the next generation will let them succeed. But a continuation of crap on crap which destroyed the British car industry well bye bye
Your irrational hatred of unions has reached a new height, blaming british cars’ reliability on labor unions!
I can’t even..