JLR may retain ICE models longer in US amid high tariff, EV market shifts

Jaguar Land Rover said changing market dynamics and tariff pressures may require it to keep internal combustion engine vehicles in its US portfolio for longer

Jaguar Land Rover (JLR) said it may retain internal combustion engine (ICE) vehicles in its US portfolio for longer even as it continues with its 18 billion euros electrification investment programme, signalling a recalibration in product prioritisation amid evolving market conditions and tariff pressures.

 

Speaking during Tata Motors’ Q4 FY26 earnings call, JLR management said the luxury carmaker remains committed to its five-year investment plan beginning FY24, although changing market dynamics could alter the allocation of spending across technologies and geographies.

 

“We remain committed to our 8 billion euros over five years, starting FY24,” JLR Chief Financial Officer Richard Molyneux said. “There is inevitably going to be a little bit of a change in prioritisation of that, as globally and particularly for the US market, we need to keep ICE engines in our portfolio for longer,” he added.

   

The comments reflect the growing uncertainty around the pace of EV adoption globally, particularly in North America, where several automakers have recently moderated EV investment plans amid slowing demand growth and changing regulatory priorities.

 

JLR’s profitability has come under pressure from higher US import duties at a time when the US remains one of its largest and most profitable markets. The company had temporarily paused shipments to the US after Washington imposed a 25 per cent tariff on imported vehicles in April 2025, before some duties were later moderated under a UK-US trade arrangement. It resumed exports in May.

 

At the same time, JLR continues to face weak demand conditions in China, where luxury carmakers are battling slowing consumer spending and rising competition from domestic premium EV brands. Management said “challenging market conditions in China” weighed on FY26 profitability. Weakening luxury demand in China has become a broader industry-wide concern for global premium automakers including JLR, Aston Martin and others.

 

Despite this recalibration, JLR maintained that its all-electric Jaguar strategy remains fully intact.

 

“Jaguar is staying all electric. That is absolutely right,” Molyneux said, adding that the upcoming vehicle had received strong internal feedback and remained central to the brand’s repositioning strategy.

 

The company said launches including the Range Rover Electric, Range Rover Sport Electric, EMA-based vehicles and the new Jaguar line-up remain on track.

 

JLR’s comments came alongside a difficult FY26 performance impacted by multiple headwinds. JLR revenue for the March quarter fell 11.1 per cent year-on-year to 6.9 billion euros, while FY26 revenue declined 20.9 per cent to 22.9 billion euros.

 

The company said profitability was hurt by higher US import duties, weak China demand and the planned wind-down of outgoing Jaguar models ahead of the new Jaguar launch. Operations were also disrupted earlier in the year because of a cyber incident that temporarily impacted production.

 

JLR reported free cash flow of 829 million euros in Q4 FY26 but negative free cash flow of 2.2 billion euros for the full year. Year-end cash balance stood at 2.8 billion euros, while total liquidity was 6.9 billion euros.

 

Management also acknowledged that JLR’s breakeven threshold has risen above 300,000 units because of higher investment spending and weaker cash generation following tariffs and other disruptions. However, the company said it aims to reduce breakeven volumes back towards 300,000 units over the next two years through structural cost reduction initiatives and revenue growth.