Jaguar Industrializes Outside The U.K. And Launches New SUVs

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About: Tata Motors Limited (TTM), Includes: TSLA
by: Anton Wahlman
Summary

Jaguar used to be sedans and sports coupes made in the U.K.

Now, Jaguar is turning into a majority-sales SUV company, and built in factories outside the U.K.

The Jaguar E-Pace SUV is built in Austria, and U.S. sales start now. It’s a half size smaller than the F-Pace, which is 47.8% of Jaguar U.S. sales.

Jaguar Land Rover’s new factories outside the U.K. free up capacity to produce more Jaguar SUVs.  Next up is the Slovak Republic.

Six months after the Jaguar E-Pace arrived in the U.S., Jaguar’s first electric car, the equally Austrian-built I-Pace SUV, will arrive in U.S. showrooms.

For over half a century, Jaguar has been synonymous with the UK and with sedans and sports cars. You bought a Jaguar because it made you feel like a member of the British Royal family, and that the car was actually built in the UK too.

In less than two years, that description of Jaguar has changed dramatically, and in less than a year from now, this transformation will have been completed. Jaguar has moved into non-UK manufacturing and has become a majority-SUV company.

Let's start with the manufacturing. While it's true that Jaguars have been assembled in some far-flung geographies before, it was only for politically-induced local consumption, behind steep tariff walls. It wasn't a free market decision to locate a factory there in order to export the product worldwide from that location. For example, no Jaguar sold in the U.S. before 2018 has been made outside the U.K.

Jaguar partnered with contract manufacturer Magna to produce the E-Pace small SUV in Austria starting in 2017. It went on sale in Europe in late 2017, and arrived in U.S. dealerships starting in the last few weeks of January 2018.

This Austrian factory will also produce Jaguar's first all-electric car, the I-Pace, starting in the next month or so. The I-Pace all-electric SUV arrives in European showrooms in the second quarter of 2018 and in U.S. dealerships around the end of July 2018. This will be the first major premium all-electric direct competition to Tesla (TSLA).

These two SUVs - one gasoline/diesel, and the other, all-electric -follow the F-Pace, which was Jaguar's first SUV and has been manufactured in the U.K. since early 2016. It constituted 47.8% of the brand's unit sales in the U.S. in 2017, which is a higher percentage than any of its major peers:

2017 U.S. sales

nameplate

total US

percentage

Jaguar F-Pace

18946

39594

47.85%

Cadillac XT5

68312

156440

43.67%

Volvo XC60

22516

81504

27.63%

Audi Q5

57640

226511

25.45%

Lexus NX

59341

305132

19.45%

Mercedes GLC

48643

375311

12.96%

BMW X3

40691

352790

11.53%

Infiniti QX50

16857

153415

10.99%

As you can see in the table above, the only SUV that comes close to matching the Jaguar F-Pace's contribution to its brand's 2017 unit sales is the Cadillac (GM) XT5. With the slightly smaller Jaguar E-Pace starting U.S. sales in late January 2018, and the Jaguar I-Pace to follow six months thereafter, it looks all but certain that Jaguar will become a majority-SUV company in the U.S. for 2018 as a whole. That's quite a transformation from Jaguar's heritage as a sedan company worthy of the most distinguished British political leaders and Captains of Industry.

Jaguar's parent company Tata Motors (NYSE:TTM), which also manufactures Land Rover products, also is in the final months of completing its own new factory, located in the Slovak Republic. Initially, this factory will manufacture the Land Rover Discovery - in part in order to free up capacity in the U.K. to make additional Jaguar vehicles there. This Slovak factory also could build Jaguar products in the future, although Jaguar has not announced any specific plans to that effect.

This all brings us to the main subject of what just showed up fresh in U.S. Jaguar dealerships in the last couple of weeks: The E-Pace SUV. Given that the F-Pace quickly captured 47.8% of Jaguar's U.S. unit sales in 2017, adding a slightly smaller version seems like a "can't miss" proposition.

While the F-Pace is based on the same platform as the Range Rover Velar, the E-Pace is based on the platform from the Range Rover Evoque and the Land Rover Discovery Sport. Among other things, this means that the E-Pace is mostly based on steel, as opposed to the more aluminum-intensive Jaguar and Land Rover platforms.

Therefore, despite being 13 inches shorter than the F-Pace, the E-Pace weighs approximately as much as the F-Pace. From a design perspective, the inspiration for the E-Pace came mostly from the F-Type two-seat sports car. You can see it in the front lights, the rear lights, and the driver's cockpit, including the steering wheel and the center stack grab handle.

Jaguar's internal code name for the E-Pace was "The Cub," which is not a reference to a Chicago baseball team, but rather to a baby jaguar. Sort of like a puppy, the E-Pace is a little shorter and a little rounder, with big eyes, big ears and big paws, when you examine the proportions.

In my opinion, this "cub" design works extremely well. The E-Pace is 13 inches shorter than the F-Pace, but it's essentially just as wide. When you sit in the front, it doesn't seem small at all, other than being easy to park and maneuver in tight spaces.

The E-Pace is as wide - or wider than - as the Audi Q5, Mercedes GLC and BMW X3, but it's much shorter than all of them. It's as long (short) as the Audi Q3, Mercedes GLA and BMW X2 - one size smaller crossover-SUVs - but of course considerably wider than all of those.

Therefore, if you look at the E-Pace from above, you will find that the E-Pace is more square than almost any other car on the market: It's exceptionally short in relation to its considerable width. Because the car is so tall, it still makes for very upscale driving and riding space for at least the two people in the front seats.

Considering the E-Pace's unusual dimensions - a combination of being short and wide - I argue that it does not have a perfectly direct competitor. In this relatively narrow definition, it is currently a class of one.

The E-Pace's driver's cockpit looks easily better than any other Jaguar. If you sit in this car next to Jaguar's next-larger SUV the F-Pace, you're going to want this one, especially when outfitted in red leather. The exterior looked exceptional in a new "cement" gray color and blacked-out wheels.

The driving experience was predictably Jaguar-taut and competent. The ride is a hair on the "al dente" side and the steering is precise. The seats are very firm, but work extremely well. After a full day behind the wheel, flogging it in the twisties well beyond what a normal driver will do, my backside felt remarkably fresh.

The only downsides I found with the E-Pace were an unfair one, and one fair. The unfair one is that the initial "turbo" lag means this car is not mistaken for an electric car. The fair one is the same objection as I have with all Jaguar Land Rover products: The lack of Android Auto. The regular Jaguar system is not bad by some historical comparisons, but there is no substitute for Android Auto.

I also should add that fuel economy is not the best in class at 21 MPG city and 28 MPG highway for the base model (the higher-output version drops the highway number to 27 MPG). The Infiniti QX50 now offers the best fuel economy in the peer group, followed by Audi Q5 and Lexus NX. However, the differences here are relatively small, on the order of 1-2-3 MPG depending on the exact comparison between the versions of these cars.

The reality is that most likely a majority of buyers will buy the Jaguar E-Pace for its superior exterior - and to a lesser extent interior - design. There's nothing in the market that looks this good, and looks sell. At a starting price of $39,595 it is not all that much less expensive than the lager F-Pace. As with other Jaguars, it's possible to add lots of options - in this case approximately $25,000. I priced an E-Pace with all the major options to $63,570. Most people will end up buying somewhere halfway in-between those two points, say just above $50,000.

About that $39,595 starting price: I'm unable to get to a reasonable configuration for less than $41,715. Here is how I get there:

Base price: $38,600

Mandatory delivery: $995

That beautiful gray color: $590

Heated front and rear seats: $1,020

Sirius XM satellite radio: $510

TOTAL: $41,715

That said, if one wants to go "reasonably well-optioned" E-Pace, I end up at a $53,045 configuration. Expect a typical E-Pace MSRP to be not too far from there.

Either way, the first U.S. Jaguar customers can now say that they bought Jaguar's second SUV and that it's made in Arnold Schwarzenegger's home town of Graz, Austria. This isn't your father's Jaguar anymore. It's an SUV brand, and it's not necessarily built in the UK.

Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: At the time of submitting this article for publication, the author was short TSLA and long GM. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers. Jaguar hosted product intro event.