JLR signs for £625m loan to support EV transition
Jaguar Land Rover (JLR) has signed for a £625m, five-year loan to support its scaling up of electric car manufacturing and battery production. £500m of the loan is backed by an Export Development Guarantee from the UK Government.
The loan is being provided by a coalition of 12 commercial banks and the Export Development Guarantee is being provided by UK Export Finance (UKEF), the Government’s export credit agency. The aim of the Guarantee scheme is to support UK exporters of low-carbon technologies to scale up production and exports; JLR notably exports 80% of the vehicles it manufactures in the UK.
Finance from the loan will enable JLR to make good on its pledge to stop producing petrol and diesel vehicles under the Jaguar brand by 2025. For the Land Rover brand, there is a commitment to end the production of ICE vehicles for sale in the UK by 2030, and to end the production of ICE vehicles for sale in other markets by 2036. These commitments were made last February as part of a new business strategy introduced by chief executive Thierry Bollore.
There were also commitments to zero tailpipe emissions from new vehicles by 2036 and net-zero across the JLR value chain by 2039.
To help support the delivery of this business strategy, JLR has pledged to invest £2.5bn annually in R&D relating to electric and low-emission vehicles through to 2026, rising to £3bn annually between 2027 and 2030. While electric vehicles (EVs) with improved battery technology and lighter components will be the main focus, the firm is also exploring hydrogen fuel cell electric vehicles (FCEVs).
The new loan will specifically support JLR’s plans to increase EV and battery R&D and production at its sites in the North-East of England and the Midlands. JLR has operations in Whitley, Gaydon, Solihull, Manchester, Castle Bromwich, Wolverhampton and Halewood.
In a statement, the UK Government is touting the loan as a contributor to its 2050 net-zero target and 2030 ban on new petrol and diesel car sales, as well as to the Government’s levelling up agenda. The long-awaited ‘Levelling Up White Paper’ is due out this week and will reportedly detail £1.5bn of additional spending.
Exports Minister Mike Freer MP said: “JLR is one of Britain’s biggest car manufacturers. It supports the livelihoods of thousands of people across the country, and its success is underpinned by exports. UKEF has secured another major investment for the UK automotive industry that will safeguard jobs and prioritise sustainability.”
UKEF provided its first Export Development Guarantee in August 2021, to engineering and energy consultancy Wood Group. That Guarantee was described as a “green transition loan”.
Several national news outlets are today (1 February) covering JLR’s financial reporting for the third quarter of 2021. The reports revealed a 37.6% year-on-year drop in retail sales and an overall loss of £9m, which JLR primarily attributed to the global shortage of computer microchips.
The shortage is down to the pandemic; increased demand for tablets, computers and smartphones, coupled with disruption to material supply chains and manufacturers, mean that demand has been outpacing supply since early 2021. While car demand did slump in the early months of the pandemic, purchasing is beginning to pick up again in most major markets.
Today’s (1 February) news from JLR comes days after Bentley unveiled a new £2.5bn commitment to launch its first-ever Battery-Powered Electric Vehicle (BEV) and confirmed its flagship facility in Crewe as the location to manufacture its EV portfolio.
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