A report from Reuters says that Jaguar Land Rover (www.jaguarlandrover.com) is to build its new E-Pace compact sport utility vehicle in Austria and China — and not in the UK.

JLR said its three British plants were either full or near capacity, but the decision could spark fears that the firm is looking to increase its output by using overseas operations, rather than boosting its domestic capacity.

The British company, which is owned by India’s Tata Motors and is rapidly expanding its production levels and model line-up, decided in 2015 to build a major new plant in Slovakia, rather than expand its operations in Britain.

Reuters says that, like much of the British car industry, JLR is worried that Brexit could leave its car exports facing lengthy customs delays and tariffs of up to 10%, risking the viability of production in Britain.

The E-Pace will be produced by the Austrian contract car maker Magna Steyr (a unit of Magna International), and by JLR’s plant in China (this is a joint partnership with Chinese car maker Chery).

In a statement, JLR said: “With plans already in place to take Jaguar Land Rover’s three vehicle-manufacturing plants in the UK close to their operating capacity, the creation of overseas manufacturing facilities delivers the additional volumes needed to support the company’s future strategy.

“It allows Jaguar Land Rover to offer its customers even more exciting new vehicles, to protect against currency fluctuations and to build a globally competitive business.”

Magna will also produce the firm’s previously announced first electric model — the I-Pace — from 2018, although JLR has said it wants to build low-emissions vehicles in Britain, if certain conditions are met.