Episode 7 with Erwin Bakker | The New Era of Driving: EVs, Subscriptions & Circular Design

The automotive landscape is undergoing a seismic shift, and episode seven of the Auto Futurecast podcast dives deep into this transformation. Hosted by Chris Kirby and joined by Erwin Bakker, a crucial figure in Jaguar Land Rover’s Global Financial Services team, this episode offers a wealth of insights into the evolving nature of financing, the adoption of advanced business models, and the future of vehicle ownership.

If you’re interested in how the automotive sector is adapting to changing customer needs, technological innovations, and evolving financial structures, this episode is a must-listen. Here’s a detailed breakdown of the key topics covered.

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Highlights from the Episode

1. Jaguar Land Rover Financial Services – Leveraging Partnerships

Erwin Bakker starts by providing an overview of the role Jaguar Land Rover Financial Services plays in the organisation. Unlike many OEM competitors with in-house finance capabilities, JLR operates through partnerships with leading financial institutions across global markets. This strategy enables them to:

· Facilitate financing options for customers purchasing vehicles.

· Ensure liquidity through wholesale financing to support their retailer network.

· Adapt flexibly to changing market demands with innovative approaches to business models.

2. Leading Automotive Financing Beyond Transactions

The discussion moves into the broader landscape of automotive financial services as Erwin reveals a crucial focus of his role: pushing boundaries and unlocking innovation. With JLR’s embedded model, the Global Financial Services team works closely with commercial operations, aligning financial strategies directly with the company’s overarching objectives. Key initiatives include:

· Transitioning relationships with third-party partners to drive innovation.

· Exploring risk-sharing possibilities within financing models.

· Ensuring partnerships truly lead the market and align with dynamic client needs.

3. Subscription Models and Vehicle Usage

One of the episode's most significant topics is the shift in consumer behaviour towards "vehicles as a service". Consumers are increasingly favouring flexibility over traditional ownership. Erwin and Chris explore pivotal trends, such as:

· Subscription Services: JLR’s Pivotal offers premium car subscription models, particularly appealing to high-earning customers willing to pay for flexibility and no-ownership responsibilities.

· Premium Rental Models: For urban customers or part-time drivers, JLR explores premium rental options short-term. This ensures they accommodate both high-frequency users and those only taking occasional trips.

· Global Trials: JLR’s experiments in Germany and other markets highlight the ongoing development and exploration of scalable subscription models.

One of the key challenges discussed is the economics of subscriptions, particularly in light of significant depreciation in vehicles’ early life stages. JLR is experimenting with strategies to counterbalance this perception, ensuring long-term sustainability.

4. Electrification and New Business Models

The global shift to battery-electric vehicles (BEVs) is at the heart of JLR’s transformation plans. Erwin comments on the unique advantages and challenges BEVs present to the business model:

· Changing Consumer Ownership Dynamics

Because BEVs involve uncertainties around battery technology, clients often prefer leasing or subscribing to vehicles rather than outright ownership. Flexibility in these models addresses concerns relating to battery health, depreciation, or future value.

· VEHICLE LIFE EXTENSION

With examples such as Waymo’s Jaguar I-Pace fleet reaching impressive mileage while maintaining 90-93% battery health, Erwin highlights how BEVs present significant opportunities to extend vehicle lifecycles. This can shape a future where second and even third ownership phases deliver better value while maintaining high performance.

· Repurposing BEV Batteries

JLR is exploring second-life applications for batteries, such as energy storage units. With nearly 70% capacity still usable even after being retired from vehicles, these batteries can serve as grid stabilisers or backup sources, cultivating a responsible, circular economy.

5. Long-Term Client Relationships Through Service-Driven Experiences

The importance of customer lifecycle management emerges as a recurring theme in this conversation. From the moment of purchase to the vehicle’s last stage, Erwin underscores the potential to retain customer engagement through every touchpoint. Strategies include:

· Extending engagement beyond sales with exclusive vehicle experiences, such as JLR’s Land Rover off-road sessions.

· Building robust service ecosystems that prioritise continuous service, repairs, and over-the-air updates.

· Innovating around modular vehicle designs, allowing features to be upgraded across an extended lifecycle, broadening a vehicle’s appeal to new customer segments.

An interesting analogy raised during the discussion compares car subscriptions to burger restaurants. Whether it’s a fast, budget-friendly burger at McDonald’s or a gourmet experience at a high-end gastropub, the product caters to different demographics and needs. The same idea applies to subscription models tailored to varying income levels and usage requirements.

6. Preparing for the Future of Mobility

Erwin and Chris explore how car OEMs, dealers, and financial services need to keep pace with rapidly evolving client behaviour and expectations. Highlights include:

· The role of data and software updates in maintaining vehicle desirability over time.

· Anticipating the needs of younger generations, who prioritise flexibility and access over ownership.

· The responsibility of OEMs to align internal structures, make EVs more sustainable, and develop cradle-to-cradle lifecycle models.

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Takeaway and Final Thoughts

This episode of Auto Futurecast offers a priceless glimpse into how Jaguar Land Rover is positioning itself at the forefront of the automotive industry’s transformation. From business model innovation to enhanced customer retention strategies and sustainable electrification efforts, they are redefining what it means to deliver value at every stage of a vehicle’s lifecycle.

If you're in the automotive or mobility sectors, this episode is a must-listen. It provides actionable insights into the trends shaping our industry and what it takes to remain competitive in this fast-moving market.

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