Stellantis’ partnership with JLR came as a shock, but there are many reasons why it makes sense
Perhaps the most eye-popping news coming out of the Stellantis investor day on 21 May was that the 14-brand company is working with JLR to “create synergies across product and technology development”, focused on the US.
After dropping that bombshell, executives firmly sealed their lips, leaving a void to be filled by fevered theories. What are we talking here? Land Rovers based on Jeeps?
But later in the day, CEO Antonio Filosa added this detail in his Q&A session with analysts: that the deal could include “capacity-sharing”, ie JLR building cars in Stellantis’ US plants.
Suddenly it started to make sense. Filosa went on to say that “the new trade conditions makes our installed capacity [in the US] very attractive to many other competitors or potential partners”.
North America is now JLR’s biggest market, as China’s wealthy car buyers shift to local brands. But that shift has coincided with the US’s sudden divergence from the rest of the world. Under Donald Trump, emissions legislation has been gutted, removing the need to electrify ICE vehicles in any way. You don’t even need stop-start any more.
For a relatively small global player such as JLR, creating cars just for the US is expensive. Ideally, car makers want legislation to converge globally. Instead the world’s biggest markets are fragmenting at a speed that is horrifying executives.
At the same time, the US has increased tariffs on imported cars – 10% from the UK and 15% from the EU. Suddenly all Land Rover models are way more expensive than locally built competition, including BMW and Mercedes-Benz SUVs.
So enter Stellantis. The question is, how deep could this collaboration go? You don’t need to puff too hard on the magic tailpipe to imagine the ‘Defender Heritage’, a Hemi V8 off-roader atop the Jeep Grand Wagoneer’s frame, leaning hard on classic design cues and filling out spare capacity at the Stellantis plant in Warren, Michigan.
Depending on how well this collaboration goes, JLR could even produce the next Defender entirely in the US, leaving its Slovakian plant to build electrified models more suited to the European and Chinese markets.
Both JLR and Stellantis need (and have promised) to improve quality levels, but their partnership could well dig JLR out of a hole created by the rapid collapse of globalisation.
