Jaguar Land Rover has shelved plans to build electric vehicles at parent company Tata Motor's upcoming $1 billion factory in south India, four people with knowledge of the matter said.
The British luxury car unit was unable to find the right price-quality balance for locally sourced EV parts, three of them said, adding that the decision also reflects slowing demand for electric cars.
"For India, all the work (on JLR electric vehicles) has stopped. Everything has been suspended since about two months," said a supplier source.
Global car brands are revamping their electrification plans amid stiff competition from Chinese players, a shift in demand in favour of hybrids and as governments ease timelines to meet emission rules and EV sales targets.
JLR's decision is also expected to delay plans for Tata Passenger Electric Mobility, Tata's local electric car unit, to launch the first of its premium Avinya models, the sources said.
The cars are to be built on the same platform as JLR's electric vehicles and some components were to have been jointly sourced.
Tata began construction of the new factory, which will also assemble vehicles other than EVs, in September. The plant is slated to produce over 250,000 cars a year when it reaches full capacity in about 5-7 years.
The shelved plans called for JLR to manufacture more than 70,000 electric cars there and Tata's EV unit to build 25,000, the sources said.
The sources were not authorised to speak to media and declined to be identified.
Tata said in a statement to Reuters that the production timelines and choice of models to be built at the new factory in Tamil Nadu will be aligned with Tata and JLR's broader strategy and market requirements.
Tata, the biggest seller in India's nascent EV market, faces growing pressure from rivals like JSW MG Motor and Mahindra and Mahindra hich have launched new, feature-rich models with longer driving ranges.
Tesla is also finalising plans to launch EVs in India, which is the world's third-largest car market with 4 million vehicles sold annually. EV sales currently account for about 2% of total car sales.
ECONOMICS NOT WORKING OUT
In November, JLR hosted a meeting with local suppliers in Mumbai where it shared details of its plans and talked about locally sourcing components.
Some suppliers were asked to provide initial information on the pricing of parts but those talks have now been suspended, according to the sources.
JLR has most of its production in Britain, Europe and China. But it assembles some of its cars like the Range Rover SUVs at Tata's plant in Pune in Maharashtra.
Tata's EV unit had planned to firm up orders with some suppliers by the end of January but is now making changes to its designs as the economics of its plan are not working without JLR, two of the sources said.
Tata in January pushed back the launch of its Avinya EV to 2026-2027 from an earlier plan for this year. It was not immediately clear if the current situation will cause further delays.
"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 said in its statement.
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