"How Jim Ratcliffe’s ‘farmer’s car’ became a £1.4bn headache.
Supply chain woes, marketing issues and a strategic blunder are weighing on Ineos’s Grenadier
Sir Jim Ratcliffe had a simple idea in mind when he started Ineos Automotive, his passion-project car company.
Dismayed that the beloved Land Rover Defender had gone out of production in 2015, the petrochemicals billionaire set out to create his own version.
His would be a car made for real, off-road adventures, delivering a riposte to the curvy, “luxury SUVs” produced today by the likes of Range Rover.
The result was the angular Grenadier 4x4, launched in 2022 with a starting price of £65,000. It even came with its own legend: Sir Jim claimed to have come up with the idea over a pint with friends while sitting in a London pub of the same name.
The car’s main selling point is summed up neatly on the landing page of Ineos Automotive’s website: “They don’t make 4x4s like this anymore.”
There is just one small problem: at the moment, they don’t make them at all.
Dismayed about the end of Land Rover Defenders, Sir Jim wanted the Grenadier to support real off-road adventures Jay Williams
Ineos confirmed earlier this month that its car factory in Hambach, France,
has completely ground to a halt after one of its key suppliers ran into financial difficulties.
The production crisis has dealt a fresh blow to the company in what has been a difficult year in more than one respect.
In July Ineos announced it was
delaying the launch of the Fusilier electric vehicle indefinitely, blaming weak consumer demand and tough regulations that might prevent the car from using a petrol-fueled range-extender.
At the same time, the company suffered a fall in sales across Europe as a wave of pent-up demand that followed the pandemic petered out.
They are problems that even the biggest of car companies would struggle with, says Nick Parker, an automotive analyst at AlixPartners, let alone a new entrant to the market.
But they also underline why Sir Jim’s foray into carmaking – which has cost him at least £1.4bn so far – is a highly risky business.
“Starting a new car company is phenomenally difficult,” Parker says, “and frankly it is only going to get harder and harder now, from every angle.
“You’ve not only got incoming regulation, but also the need to develop the technology – which for an independent is extremely hard – and a need to differentiate yourself somehow in the customer’s mind, so they don’t just go to one of the more established car manufacturers.”
Elon Musk, the billionaire founder of electric car maker Tesla, found out just how hard it is to take on the biggest car companies when he sought to ramp up production of the Model 3, describing the experience as “the most difficult and painful year of my career” in 2018.
Elon Musk said increasing Tesla’s Model 3 output was ‘the most difficult and painful year’ of his career REUTERS/Aly Song/File Photo
Lynn Calder, chief executive of Ineos Automotive, insists her company’s problems are not quite that bad. But she is quick to add the car industry is “definitely not for the faint-hearted”.
“I certainly wouldn’t say it’s been the worst year of my life,” she says. “But it’s been extremely difficult. And that’s why people don’t get into the automotive business.
“The barriers to entry – the investment requirements, the complexity, all of those things – are just huge.”
Designing a car, Calder points out, is often the easiest part. It is finding a way to mass produce your vehicle that is much more difficult, coupled with building a resilient supply chain.
Ineos Automotive, which began as “Projekt Grenadier” in 2017, originally looked at manufacturing in South Wales before swooping on the factory in Hambach, which had previously been operated by Mercedes-Benz.
There, it began production of the Grenadier in October 2022. But ramping up output proved difficult.
“We didn’t have enough parts and we didn’t have our supply chain up and running properly,” says Calder.
One early problem was the lack of a computer system to quickly tell employees exactly which parts were in the loads being delivered by trucks. Another was getting the parts to where they needed to be on the assembly line at the right times.
“You had a long list of things holding us back and you just had to go through them, every day, and knock them down like skittles,” Calder says.
Since then, that work has started to pay off: in the first quarter the company was producing about 20 Grenadiers per day but more recently the figure has leapt to 110.
But, for comparison, that is still a fraction of the roughly 700 cars produced per day by the Nissan plant in Sunderland.
The numbers are also academic at present, given that Ineos Automotive’s plant has been left idle due to its supplier troubles.
Recaro, a manufacturer of racing-style seats for several carmakers, is teetering on the brink of collapse, leaving Ineos with a chair-shaped hole to fill in its cars.
The Grenadier’s interior. Ineos will have to find another supplier for its car seats if Recaro collapses
patrick@beadyeye.tv
And despite appearances, explains Calder, it is not a quick fix. Approval of the Grenadier’s design by safety regulators is partly based on factors such as the seat’s “reference point”, or how it is angled.
“Of all the components it could be, it’s just a really fundamental one,” she adds. Replacing it will require new crash tests to be carried out, creating further delays.
At the moment, Ineos conservatively estimates its factory may not be up and running until 2025 as it scrambles for alternatives.
Of course, the Recaro issues are not unique to Ineos. They come at a time when automotive supply chains have been left stressed by the pandemic, soaring inflation and more recently higher interest rates.
Some suppliers have also invested in preparing for the switch to electric vehicles, only to see this backfire as their customers – the major carmakers – delay orders on the back of an electric car sales slowdown.
For smaller carmakers like Ineos, supply chain volatility is much trickier to deal with, says Felipe Munoz, an automotive analyst at JATO Dynamics.
“There are always problems, but the smaller companies are much less likely to have a plan B,” he says. “That leaves them much more vulnerable.”
Ineos’s production woes also come at a time when the company’s sales have tumbled in Europe.
About 1,600 of the company’s cars were registered across the region (including the UK) during the first eight months of 2024, a drop of 23pc compared to a year earlier, according to JATO.
This included a 61pc drop in UK registrations – from about 1,000 cars down to 400 – and a 14pc drop in Germany.
Ineos claims its true sales figures are much higher. The company says it has sold around 20,000 vehicles globally, but this number is understood to include some that have not been delivered yet.
The drops come amid a weak car market generally, as cost-conscious consumers tighten their belts following a period of sharp price rises.
But Calder admits Ineos also tripped itself up with early business decisions – taken before her arrival – that she would not have made in retrospect.
For example, the company initially marketed the Grenadier as a “stripped-down”, functional vehicle – but the final version ended up boasting much higher specifications.
“We talked about this car as a farmer’s car,” she explains. “We said it’s going to be cheap and utilitarian. But over the development of the vehicle that changed – we put a BMW engine in it, for goodness sake.
“So it’s a really nice car, it’s a premium car. But it means we now need to talk about the car differently.”
Another early blunder was the company’s decision to pursue a direct-to-consumer sales model, rather than entrusting sales to dealerships.
Many carmakers have recently looked at adopting this “agency” model, used by Ineos in markets such as the UK and Germany, but Calder believes it was a mistake.
The company is now in the process of striking deals with dealers in every market so that they will take over the selling.
“It was an example of us thinking we can do something better than dealers who’ve been doing it for over 100 years,” she admits.
“Let’s just let the people with decades of sales experience do their job.”
Despite all this, a bright spot for the company is America, where sales of the Grenadier are booming.
The company has sold roughly 10,000 cars there already, making the US its biggest market by far, Calder says.
By a wide margin, the most sales have been made in the states of Texas and Los Angeles. Buyers are thought to have ranged from oil and gas executives to Hollywood celebrities such as Jamie Foxx, who has been spotted driving his Grenadier around the hills.
Calder says America, where big cars are much more prevalent than in Europe, is a natural market for the Grenadier.
“A lot of Americans love an off-road car that they can do a lot of mileage in. They also want something that’s comfortable,” she says.
This month, Ineos also launched in China and Mexico, taking its global presence to a total of more than 40 countries.
However, key challenges still loom on the horizon for the company.
Beyond its immediate production problems, Ineos needs to decide whether it will stick with its existing rugged image or compete with the likes of Range Rover in the luxury SUV space, says JATO’s Munoz.
“If they are looking to change their position towards comfort and luxury, they might find that even tougher,” he warns. “There are already brands out there which are stronger and bigger.”
Also troubling is the prospect of a ban on new petrol cars in the UK and the European Union, which is due to come into force in 2030 and 2035, respectively.
At present, Ineos believes this would rule out a
planned variant of the electric Fusilier which would use a petrol-fueled range extender – a version Sir Jim himself has said he would prefer.
Calder admits the issue plays on her mind but argues the 2030 cutoff in Britain is “extremely optimistic”.
And with the company’s factory lines at a standstill today, it’s a deadline that feels a long way off.
For Calder, the answer is to stay tough in the face of obstacles – a bit like the Grenadier itself.
“To have production down at this point when we’re really gaining momentum is frustrating, for sure,” she says.
“But it’s not going to break us.” "
