Legacy automakers aren't thrilled about the cost of introducing plug-in vehicles - we would be surprised if they were.

BMW and Toyota are the examples of established car manufacturers that are now making the forced difficult transition to electrification, but understand the threat to their finances at the same time.

BMW 530e

BMW 530e

Both companies  have announced large increases of R&D spending to develop electrified, autonomous and connected models, but at the same time are still looking for cost savings to preserve their net incomes.

Toyota intends to spend a record 1 trillion yen ($8.8 billion) on the R&D in 2017.   While at the same time, in the first half of the year, Toyota noted around $900 million of savings in other areas.

Osamu Nagata, the company’s finance director in Tokyo said:

“We not only need to develop these leading technologies but also need to commercialise them. To do that, we need to increase R&D expenses. This will be a cost burden so we need to speed up cost reduction.”

BMW recently invested €400 million to expand its Munich R&D center. The Dingolfing centre (main EV powertrain facility) is also expected to undergo a serious expansion.

"BMW said currency movements held back its performance, with revenue flat at €23.4bn (£20.6bn) and profits slipping 1.8pc to €1.8bn in the third quarter, because of higher expenses and R&D investments.

Sales of the company’s BMW, Mini and Rolls-Royce marques rose 1.2pc to 590,415 in the three months, compared with the same period a year ago."

At least for the short term, Toyota recently increased revenues - and because of the weaker yen, increased profits even more.

"Toyota posted group revenues 8.6pc higher at 14.2 trillion yen (£94bn) and net profit 13.2pc stronger at 1.07 trillion yen in the first half."

Better hoard that cash while you can Toyota, because you are going to need it to play catch-up.

source: Telegraph

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