Apropos of your comments on the X Type Jaguar brings two similar situations to mind: Cadillac and its Cimarron--a debacle that Cadillac managed to survive--but forever cheapened the brand, and the more complex downfall of Packard--a process that took 22 years.
While Packard's 1936 introduction of the Buick-priced 120--and later the even less expensive 110, probably saved the company from bankruptcy during the Depression, it forever cheapened the brand in the eyes of those who could afford a "proper" Packard. By the early 1950s, once the post WW II pent-up demand for cars subsided, Packard couldn't compete with the likes of the Big Three and came (too) late to the table with the required V8 and automatic transmission, forcing first a merger with Studebaker, and then the final ignominy of Studebakers badged as Packards--the American equivalent of a Morris badged as a Wolseley.
In a similar vein, BMW marketed its E36 Three series hatchback (the 318i) as an entry level BMW, equipping it with the least powerful engine available in the US market despite more powerful versions being available overseas. In doing so, they shut out the enthusiast market who would have snapped up the more powerful 6 cylinder versions in the lightest body (their previous success with the 2002). And the resulting poor sales caused BMW to forever eschew the "hot hatch" market in the US, allowing domination by VW and other brands.
WRT the Mustang E--to use a shopworn phrase, "putting lipstick on a pig..."