Published on May 21st, 2017 | by James Ayre0
BMW CFO: R&D Spending To Rise To Deal With Electrification, CO2 Emissions Reductions, & Self-Driving Tech
May 21st, 2017 by James Ayre
BMW Chief Financial Officer (CFO) Nicolas Peter has revealed that the company’s research and development budget will be rising as a percentage of the firm’s overall budget in order to deal with the challenges posed by a rapidly changing industry.
In particular, the changes relate to electric vehicle tech, the need for a reduction in carbon dioxide emissions, and self-driving vehicle tech, the BMW CFO mentioned in an interview with the German news source Boersen-Zeitung.
The quote read: “Reducing CO2 emissions, electrifying engines, and autonomous driving are the key challenges for our industry over the next years.” Notably, BMW seemed to make an early move into electric cars — with the BMW i3 and i8 — but hasn’t unveiled much (aside from gas cars turned into plug-in hybrids) recently.
While noting that research and development spending in 2017 would rise to a ~6% share of the firm’s overall budget, up from around 5.5% in 2016, Peter also stated that 2018 should yet again show a higher ration of spending for R&D.
Note that this need for a shift in Big Auto’s spending has been clear for a while, and is one reason why the industry hasn’t been keen to produce the most compelling electric vehicles possible. (See: “What Goes On In The Minds Of Auto Execs?” Or read about Fiat-Chrysler’s CEO Sergio Marchionne’s frank and succinct statements on the matter here: “Sergio Marchionne Admits The Reason Automakers Detest The EV Revolution.”)
Reuters provides more: “German Chancellor Angela Merkel, in her weekly Saturday podcast, also said it would be desirable for Europe’s biggest economy to produce battery cells for electric cars locally and reduce dependency on Asian suppliers. ‘And if we are part of the research, also with regard to the prototypes, then I think it improves the outlook of bringing modern production of next-generation cells back to Europe and Germany,’ she said.”
Personally I have to really question that sentiment. The reason that most battery production is based out of Asia is that labor there, particularly skilled labor, is often a lot cheaper than in Germany.
And there’s always the reality that if the European Union does come apart in the coming decades, as seems a real possibility, that Germany will lose its ability to sell relatively cheaply on the international market. How, in such a situation, could electric vehicle battery cells produced in Germany compete on the international level if that happens?
So, I’ll note here that I’m skeptical that large-scale production of electric vehicle batteries in Germany will ever make economic sense. Large-scale production in various parts of Eastern Europe, on the other hand…