Following the recent news that Jaguar Land Rover and BMW are to work together on electric vehicle components, David Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his view on the news:

“News that these two car companies are planning to collaborate to engineer and manufacture Electric Drive Units (EDUs) for next generation electrified vehicles is the latest in a long line of similar announcements of collaborations between car companies.

“GlobalData forecasts that by 2033, annual global output of fully electric vehicles is forecast to be more than 19m units, led by rapidly rising demand in China and Western Europe, currently they account for a little over 2% of annual global light vehicle production – around 2.3m units.

“We also forecast that the total electrified vehicle market – including full hybrids as well as fully electric vehicles – will account for slightly more than 6.5% of global light vehicle production in 2020, increasing to nearly 28% by 2033.

“The automotive industry is coming under intense pressure to invest heavily in advanced technologies – in areas such as electric drive and driverless systems. These emerging technologies are expensive and make working with other companies to share costs extremely attractive. They also serve to highlight the considerable scale advantages that can be levered from lower unit costs, especially in parts of the market – such as electrified vehicles – set to see much higher demand over the next ten years.

“We can expect to hear many more such announcements from car companies over the next few years ranging from selective collaborations, joint ventures to partial or full mergers.

“Tata Motors owned Jaguar Land Rover has swung to loss and is under particularly severe pressure as it seeks to rebalance its powertrain offerings away from declining diesel and towards electric. It also needs to boost flagging sales in China which is shaping up to be a growth pole for electrified vehicles.

“This collaboration with BMW offers a way to reduce development costs in a critical technology through a partnership with a fellow premium brand manufacturer. And similarly, BMW can also reap benefits from reduced development costs.”