Listen to “AD #3284 – Ranking OEMs By R and D Spending; Tesla Still Faces Issues In Berlin; GM Doubles Down On Autonomous Cars” on Spreaker.
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Runtime: 10:32
0:08 Mercedes Prepares for Natural Gas Shortage
0:44 GM Doubles Down on Autonomous Cars
1:14 Stellantis Lands Battery Plant in Canada
1:55 Tesla Still Faces Water Issues in Berlin
3:00 Mercedes To Focus More on Digital & Sustainable Solutions
4:28 Mercedes Shows Automated Valet Parking
5:11 Volvo XC60 Recharge T8 Extended Range Impressions
7:10 Ranking Global OEMs by R&D Spending
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MERCEDES PREPARES FOR NATURAL GAS SHORTAGE
Mercedes-Benz is worried that the Russian invasion of Ukraine could cause a shortage of natural gas in Europe this fall and so it’s scrambling to get ready. Automakers use a lot of natural gas to run the bake ovens in the paint shops in their assembly plants. Mercedes is looking for alternative fuels, but butane or propane are more expensive. Even though Germany cut off the brand-new Nord Stream gas line from Russia, it still gets two-thirds of its natural gas from Russia. So Mercedes is getting ready right now…just in case.
GM DOUBLES DOWN ON AUTONOMOUS CARS
The critics complain that all that talk about autonomous cars was a bunch of hype, but General Motors is pouring even more money into it. It’s buying out Softbank’s stake in Cruise for $2.1 billion. And GM is investing an additional $1.35 billion into its autonomous car business unit. GM CEO Mary Barra expects Cruise to generate $50 billion a year in revenue by 2030.
STELLANTIS LANDS BATTERY PLANT IN CANADA
Stellantis is making sure it has the batteries it needs to have EVs account for 40% of its U.S. sales by 2030. Bloomberg reports that Stellantis and LG Energy Solution will build a battery plant in Ontario, Canada. A formal announcement is expected later this week. The two companies signed a deal last year to open a battery plant in North America and begin construction next quarter with production starting in early 2024. Stellantis is also building an EV battery plant in the U.S. with Samsung SDI that will produce 23 gigawatt hours annually by 2025.
TESLA STILL FACES WATER ISSUES IN BERLIN
Tesla finally got the water permit it needed to open its assembly plant in Berlin. But this story isn’t over yet. Bloomberg reports that no other commercial or industrial development in the region will be allowed because of all the water that Tesla will be using. And the water authorities say that while there’s enough water for the first stage of Giga Berlin, more water permits will be required when Tesla wants to expand the plant.
MERCEDES TO FOCUS MORE ON DIGITAL & SUSTAINABLE SOLUTIONS
There’s big changes going on in the industry. Maybe none bigger than the switch to electrification? And coming with it is a shift in customer perception. Mercedes says buyers are viewing luxury through a different lens now, so it’s shifting its focus to more digital and sustainable solutions. Of course, that includes electrification, Mercedes identifies aerodynamics and good range as key pillars to its strategy, but it goes beyond that. It wants to bring efficiency to more areas of its vehicles, like sustainable materials. It already has plans to test out new bioplastic and animal-free leather alternatives. And it wants to be a leader in software, so it’s developing its own system in-house that will be faster, more intuitive and use AI to learn the user’s habits. Mercedes calls this a form of digital luxury. And one thing we find particularly interesting is its intent to reduce complexity. The current S-Class has more than 80 ECUs or computers, but Mercedes wants to use far fewer units to make it more efficient. However, it doesn’t say how many fewer. One of the last key pillars to Mercedes’ transition is safety. It already has a Level 2 system; a Level 3 system was recently approved in Germany and should expand to other areas soon.
MERCEDES SHOWS AUTOMATED VALET PARKING
And Mercedes continues to build its automated parking system it developed with Bosch. It just showed off the technology in L.A. because it’s thinking of installing the system on some vehicles in the U.S. But the idea is a driver parks the car in a designated spot, uses an app to start the parking procedure, the car goes and parks itself and then the user summons the car back with the app. Time saving ideas is another area Mercedes has identified will be important to future luxury buyers. Intelligent Park is already optional on some S-Classes and will follow on the EQS and EQE.
VOLVO XC60 RECHARGE T8 EXTENDED RANGE IMPRESSIONS
A new version of the Volvo XC-60 just started hitting dealer lots across the U.S. It’s the plug-in hybrid model, called the XC-60 Recharge T8 Extended Range. Now if you’re wondering, didn’t Volvo already have a PHEV version of the XC-60? You’d be right. But what’s new has to do with that ‘Extended Range’ part of its name. You see, it’s nearly doubled its range. Thanks to a new battery pack that’s over 18 kWh it can now travel 35 miles on a single charge, which is up from 18 miles. So, that ‘Extended Range’ part was added to its name, so it would be less confusing to potential buyers that might be aware of the previous model. Not sure that I see the logic, but I’ll roll with it. And it’s likely it will get dropped for next year’s model. The new plug-in XC-60 will also be able to take advantage of a new charging network Volvo is building with ChargePoint and Starbucks. They will install up to 60 DC fast chargers at Starbucks locations from Seattle to Denver. And while waiting for a charge, XC-60 customers can now take advantage of Google Assistant inside the car. Just say “Hey Google” and you can perform all types of tasks, like turn down the temp. We found it to work just as well as it does on your phone, but you will have to sign into your account if you want to do more than use Google Assistant or Google Maps, link up your personal info or get new apps.
RANKING GLOBAL OEMS BY R&D SPENDING
In the auto industry, it all comes down to product. And car companies that want to succeed have to spend heavily to compete. So we crunched the numbers on how much money automakers are spending on R&D. And we also calculated what percent of their total revenue that represented. So here’s the list. Volkswagen spends more on R&D than any else by far, $17 billion a year. And no wonder, it has so many brands to feed, at least 12, including its heavy trucks. Mercedes-Benz is next, spending nearly $10 billion a year, with Toyota right behind it. General Motors and Ford are spending similar amounts, well over $7 billion a year. Honda and BMW are in the same bracket around $7 billion, with Stellantis trailing behind. Nissan is in 9th place, and Tesla rounds out the top ten. Amazingly, Tesla spends more on R&D than the Hyundai Group, which did not make this list.
| 2021 OEM R&D SPENDING | |
|---|---|
| VW Group | $17.1 Billion |
| Mercedes-Benz | $9.9 Billion |
| Toyota | $9.7 Billion |
| General Motors | $7.9 Billion |
| Ford | $7.4 Billion |
| Honda | $7.0 Billion |
| BMW | $6.9 Billion |
| Stellantis | $6.4 Billion |
| Nissan | $4.2 Billion |
| Tesla | $2.6 Billion |
| Source: Annual Reports | |
But raw spending on R&D doesn’t tell the complete story. Big companies can spend more than smaller companies. So to get a clearer idea of how much money each automaker is devoting to R&D we calculated it as a percentage of total revenue, and that jumbles the rankings.
Now, Nissan tops the list. But there’s an explanation of why Nissan looks so good. The company is in trouble and its revenue has dropped dramatically. And that makes its R&D spending as a percentage of revenue look so impressive. Mercedes is in second place with 6.8% of its total revenue spent on R&D, while VW and GM are tied for third place. Honda and Ford are neck and neck in the R&D race, while Tesla trails behind them. And then Toyota and Stellantis are tied for 8th place.
.tg {border-collapse:collapse;border-spacing:0;} .tg td{border-color:black;border-style:solid;border-width:1px;font-family:Arial, sans-serif;font-size:14px; overflow:hidden;padding:10px 5px;word-break:normal;} .tg th{border-color:black;border-style:solid;border-width:1px;font-family:Arial, sans-serif;font-size:14px; font-weight:normal;overflow:hidden;padding:10px 5px;word-break:normal;} .tg .tg-c3ow{border-color:inherit;text-align:center;vertical-align:top} .tg .tg-7btt{border-color:inherit;font-weight:bold;text-align:center;vertical-align:top} .tg .tg-0pky{border-color:inherit;text-align:left;vertical-align:top}| 2021 OEM R&D SPENDING AS % OF TOTAL REVENUE | |
|---|---|
| Nissan | 19.7% |
| Mercedes-Benz | 6.8% |
| VW Group | 6.2% |
| General Motors | 6.2% |
| Honda | 5.5% |
| Ford | 5.4% |
| Tesla | 4.8% |
| Toyota | 3.8% |
| Stellantis | 3.8% |
| Source: Annual Reports | |
Back to Tesla for a moment. The company isn’t spending a lot on new model development right now. Elon Musk says they’re selling everything they can make at the moment and so it doesn’t make sense to introduce new models like the Cyber Truck, the Semi or the Roadster.
Remember, when you get ready to launch cars, that’s when the bills really start rolling in. So when Tesla gets ready to launch new models we can expect to see its R&D spend go up a lot. Later this week, we’ll report how much money the car companies are spending on new plants and equipment. And some of those numbers are rather eye opening.
We think that presenting numbers like this helps you really understand what’s going on in the auto industry. And you’re not going to find info like this anywhere else.
And that wraps up today’s report. Thanks for watching.
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Seamus and Sean McElroy cover the latest news in the automotive industry for Autoline Daily.
