Tata Motors Flags Tariff Headwinds, EV Setbacks; Eyes Margin Recovery and New Launches in FY26

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Tata Motors Ltd (NSE: TAMO.NS) has identified a series of near-term headwinds on its luxury arm Jaguar Land Rover (JLR), including soaring US import tariffs, softening EV demand, and withdrawal of government incentives. Despite them, the organization remains optimistic about achieving 5–7% JLR EBIT margins once market conditions stabilize.

1. US Tariffs Squeeze JLR Margins

Tata Group Chairman N. Chandrasekaran stated that JLR faces a tariff blow of $2.1 billion under new US trade rules, with import duties rising from 2.5% to 27.5%.
A just-concluded US-UK trade agreement has capped the rate at 10%, reducing the estimated blow to $790 million, but margins remain under pressure2.
JLR has halted exports to the US and is mulling cost-cutting measures, supply diversification, and pricing as a cushion against the shock.

2. Margin Outlook and Strategic Response

Tata Motors executives reaffirmed their 5–7% JLR EBIT margin target on hold until tariff normalization and normalization of demand.
The group is also facing currency volatility, regulation tightening, and a reduced pace of EV adoption, particularly in China and the US.
Long-term investment remains intact, with £18 billion invested until 2028 for new EV launches and platform upgrades.

3. EV Market Share Decline in India

Tata Motors attributed its recent EV market share decline to the FAME-II subsidy policy withdrawal and the withdrawal of a big fleet operator.
The company is resetting its EV strategy, focusing on retail demand, affordable models, and local battery sourcing to regain its footing.

Sources: MSN, TechStory, CNBC TV18, Economic Times, Financial Express, CarToq