I wouldn’t say the worst is over for China: Ralf Speth, JLR

Ralf Speth, the global CEO of Jaguar Land Rover (JLR), said it was too early to judge whether the ‘worst is over’ in China despite two consecutive months of double-digit growth for the luxury carmaker in the world’s biggest auto market.Speth told Ketan Thakkar that ‘Project Charge’, the restructuring programme that began earlier this fiscal, is starting to deliver including China and is already exceeding the targets set initially. As it did in 2010, in the immediate aftermath of the global financial crisis, JLR will have to balance two seemingly divergent strategic goals – of trimming broader costs and simultaneously investing in products that help drive smooth growth in a volatile demand environment. Edited excerpts:What is the progress report on Project Charge? Jaguar Land Rover is kind of a seismograph, whenever anyone wants to know what is really going on in the automotive world, just look at JLR. We are honest, we don’t have a finance company, we don’t have a bank or another insurance company, we cannot do things with residual values or lease cars, whatever the situation. We take everything, right on the chin.We are agile. We started the 'Project Charge' (cost cutting plan) earlier than other rivals. We are on track with our targets - not only on target, but exceeding the targets on ‘Project Charge’.It's more than challenging. We are investing in the future, like we did in 2010, when we started to simultaneously restructure and also invested over proportionately in products for the future.Is the worst over in China? Sorry, that's an absolute statement. I wouldn't say so (that the worst is over). What if tomorrow there is another issue arising out of China? We don’t know what Mr. Xi and Mr. Trump have in mind, but the issue does not affect Jaguar Land Rover alone; other companies face exactly the same.What is the way ahead for the Chinese markets? I don't know which way the economy is moving and how will China revive. We will have to manage it. It looks like the state in China is a little bit the same as in India; one cannot tell how long it will take for the economy to revive.The market for premium vehicles in China has been down by 17% last month. The mainstream market volume too is declining. We weathered the storm, we also grew last month by double digits. We are doing our part, but I cannot tell you how long will this evolution continue.What is the response to I-PACE and the initial assessment on what will drive EV adoption…Demand has been more than our expectation, and we are facing a shortage of batteries. But from a wider customer adoption standpoint, they are hesitating because of high prices and low convenience.From a global perspective, the cost will go down only in the mid-term, and not in the next few years. Why? Because the demand will become bigger and bigger, and more and more batteries for electric vehicles will be now developed and will be produced around the world.Many companies are moving in that direction; we were the first ones and there are many who are following us. And therefore, this means that now all of a sudden, there is a shortage of batteries. And building a new battery plant takes a certain period of time. And, therefore, in this kind of a very short period of time, there's not enough capacity available around the world.I guess it may take three years for capacities to come. But there will also be an issue around 2025 to meet the Brussels fleet requirement. While the car industry has a target to meet on fleet average, there is no target on the development of infrastructure.So, if the auto industry does not meet targets, it will be levied penalties, but not the infrastructure companies. For the EV market to be really successful, the price has to be accessible, the customer should have convenience of charging and source of energy should be renewable: That scenario is still some time away.About Destination Zero - moving toward zero emission, zero casualty and zero congestion. What time are you giving yourself?We’re talking about the circular economy. It is not about achieving the results today or tomorrow, but it is about going in the right direction. Okay. We know nobody can move to 100% electrified mobility at the moment based on renewable energy. The technology is not there, battery capacity is not there.And why is it a problem at the moment? The customers expect long range and to deliver that, we need big batteries, and those are very expensive; so the end price of a car today is high.Along with high price, there are hardly any charging stations and the ones that are there have different systems with no standardization. With the improvement in infrastructure, one could use smaller batteries, and with smaller batteries you can also reduce prices.Now, in Europe, there is an important agricultural element in the interiors, where usage is different from mega cities like London, Berlin or Paris. So we need to find solutions that address both the markets running on renewables.We are on track to electrify our entire fleet by 2020. Already all our plants are carbon free in the UK. Our R&D centre generates all its energy from renewable sources. We have built 3,000 sq metre of solar roof at our engine plant, which is the biggest solar roof in Britain. We are already moving in that (destination zero) direction.Can India contribute?India is a signatory to the Paris Climate Accord. India is at the forefront of this kind of thinking and mindset. In India, a lot of customers in my view may be prepared for this kind of new technology.To be sure, it’s not the question of technology for the sake of technology; it also has to contribute to the environmental issues.It doesn’t make sense if the power does not come from renewable energies. Right? Therefore, we need renewable energies. Does India have renewable energies? And, of course, the charging infrastructure?(The reporter travelled to the UK at the invitation of Jaguar Land Rover)

from Economic Times https://ift.tt/2m9djmP