BMW to Spend More on R&D

BMW’s CFO revealed in an interview to a German paper that the company is planning to significantly increase its investment in research and development in 2018. Chief Financial Officer Nicolas Peter told Boersen-Zeitung paper in an interview that was published last week that he expects the company’s research and development budget, when measured as a percentage of sales, to rise in 2018.

According to Peter, the key challenges for the automotive industry in the next few years are reducing CO2 emissions, electrifying engines and autonomous driving. He said that in 2017 the amount spent on R&D would increase to about 6 percent of sales, as compared to 5.5 percent in 2016.As BMW expects sales to be higher than the 86.42 billion euros it earned through sales in 2016, the research spend would be more than 5.19 billion euros in 2017.

The main challenge for automotive manufacturers is reducing the cost of electric cars, as this has been a considerable barrier when it comes to large-scale adoption of electric cars. At the same time, automotive manufacturers are struggling to make their internal combustion models compliant with increasingly tougher emissions norms and are faced with slowing demand for diesel models.
Germany’s Chancellor Angela Merkel, had recently stated that she felt it was desirable for German manufacturers to make the battery cells for electric cars locally and reduce their dependency on Asian suppliers. She felt that extending the scope of the research to prototypes and fuel cells would make Europe and Germany frontrunners when it comes to the modern production of next-generation cells.
Germany has an ambitious target of putting one million electric vehicles (EV) on the roads by 2020. Though this is unlikely to be achieved, any breakthrough in battery cell technology could quickly trigger a demand for battery-powered cars.

In 2016, there were less than 80,000 electric cars on German roads and the sale of EVs has continued to be sluggish in Germany despite discounts for buyers of green cars which were introduced last year.