Job cuts at Jaguar Land Rover show how a sensible corporate strategy is not always enough

Jaguar Land Rover’s decision to cut thousands of jobs comes after years of dealing with some extremely tough terrain in the world of car sales. Tough obstacles have included weakening demand from China, a shortage of vital semiconductors and the US slapping new tariffs on imported vehicles.

Then in Aug 2025, a major cyber attack caused production at Jaguar Land Rover (JLR) to grind to a halt for five weeks, losing the firm millions of pounds of revenue every day.

But these external shocks were just part of JLR’s recent journey. They also coincided with a period during which the business was becoming increasingly unbalanced.

For over the last decade or so, some of the company’s products (Range Rovers and Land Rover Defenders) have done exceptionally well, while other elements (electric vehicles) were being developed much more slowly.

And that focus on certain models has been an entirely understandable option in some instances.

During the semiconductor shortage that started in 2020 for example, JLR could not obtain enough chips to build enough vehicles to satisfy demand. So management made the commercially obvious choice – to prioritise the most profitable models.

The response reinforced what was already working best. As chip supply improved, JLR increased production of the Range Rover, Range Rover Sport and Defender, which it described as its three most profitable models. Strong demand supported high margins and high margins justified production priority. By 2026, those three models accounted for over 75% of of JLR’s wholesale volumes.

But this is where a competitive strength can also become a resilience problem. A company does not have to make a bad decision to become more exposed, but repeatedly backing its strongest products can gradually reduce the importance of other elements.

And certainly for a while, JLR’s electric efforts appeared to be less of a focus.

That said, the I-Pace model, launched in 2018, was a genuine innovation. It became the first Jaguar to win European Car of the Year in 2019 and also won World Car of the Year that year. JLR’s then chief executive Ralf Speth called it “a true game-changer”.

But being successful and quick to build one type of electric car is not the same as building an entire EV ecosystem capable of producing a succession of competitive models. Research on EV business models shows that successful scaling depends on complementary capabilities around the vehicle itself, including production, batteries, charging infrastructure and the wider business ecosystem. Tesla has been very good at this.

And while JLR invested heavily in battery, electric propulsion and manufacturing capability, it took a while to bed in. Eventually I-Pace was discontinued in 2024 and in September 2026 they launched electric Range Rover – again focusing on the car that was already the strongest.

For the Jaguar brand, a different and more radical route was chosen towards all electric and luxurious cars with a focus on value. Existing Jaguar models were progressively withdrawn while replacements were prepared.

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That may still prove to be the right strategy. But in the short term, Jaguar vehicles contributed relatively little to the business, as JLR was becoming ever more dependent on Range Rovers and Defenders. And by the time a cyberattack halted production in 2025, JLR had much less room to manoeuvre. Jaguar cars were between product generations and the EV transformation was still a work in progress.

The US tariff shock exposed another limitation. Unlike BMW and Mercedes-Benz, JLR had no substantial US manufacturing base through which to absorb the change in trade conditions.

Shocks and strategy

Responding to reports of major job losses JLR said in a statement: “As we deliver the next phase of our strategy we need to adapt to evolving global market conditions while targeting approximately £1.7 billion of savings over the next two years.

“To achieve this, we must further simplify our organisation, improve efficiency, and build greater resilience.”

Chief executive PB Balaji added: “The automotive industry faces significant challenges, with technological change amidst intense competition and ongoing geo-political uncertainty.”

This does not mean JLR management should have predicted every shock, or that every earlier decision was wrong. The Jaguar F-Pace was successful, and the I-Pace showed real innovative capability. Prioritising profitable vehicles when chips were scarce was rational.

The problem is that individually sensible decisions can gradually narrow a company’s alternatives. Research on “success traps” shows how past success can reinforce investment in existing capabilities at the expense of developing new ones. JLR shows how this can create strategic vulnerability even while parts of the business are performing exceptionally well.

Success comes not just from foreseeing what might happen if a certain strategy fails. It’s also about not becoming too reliant on specific parts of the business, which can leave the whole enterprise exposed to shocks.