Jaguar Land Rover (JLR), the UK‑based luxury carmaker owned by Tata Motors, has lowered its forecast for fiscal 2026 earnings before interest and taxes (EBIT) to 5–7 per cent, down from a target of 10 per cent, and compared with 8.5 per cent delivered in FY25. The revision is attributed to multiple pressures including anticipated increases in US tariffs on foreign‑built vehicles, shifts in product mix, and elevated capital expenditure.JLR also projects near‑zero free cash flow for FY26, signalling a tight financial outlook. The optimism for FY27, however, remains intact, with expectations of margin improvement above 10 per cent and strong cash flows once investments begin to yield returns.The downgrade comes as a shock to investors. Shares of Tata Motors declined by around 5 per cent in response to the announcement. The tariff issue has particularly impacted JLR, which halted US shipments last month after a proposed 25 per cent tariff on UK and EU‑made vehicles. The US market accounts for more than 25 per cent of JLR’s sales.To mitigate the tariff threat, JLR is redirecting some inventory to markets with lower barriers and exploring pricing adjustments in the US. It is also engaging in negotiations with the US and UK governments under a deal that allows up to 100,000 UK‑built vehicles to enter the US at a reduced 10 per cent duty—still below the standard 25 per cent. However, this relief does not extend to models like the Defender, which is manufactured in Slovakia and remains subject to full tariffs.In addition to tariff challenges, the company is investing heavily in electrification and new product development. FY26 capital expenditure is projected at £3.8 billion, up from £3.5 billion in the previous year. These investments support the launch of JLR’s first fully electric Range Rover and the next-generation electric Jaguar GT.Despite the pressures, analysts note that JLR’s free cash flow was £1.5 billion in FY25, supporting optimism that long-term goals remain achievable.