Global Automakers Maintain or Expand R&D Investment in 2020 Despite the Pandemic

While many manufacturers saw declines in sales and profits due to the outbreak of the new coronavirus, R&D expenses tended to exceed the previous year’s level as R&D cannot be scaled back against the backdrop of overheated technological competition. Although companies are serious about cost reduction due to worsening business performance, they will maintain R&D expenses at the current level or even expand investment in vehicle electrification, autonomous driving technology, product development and other areas in order to secure a superior position in the industry in the medium to long term. However, there are differences in R&D spending among companies depending on their business strategy.

In 2020, VW had the highest R&D expenses with 17.05 billion USD. VW was followed by Daimler with 10.58 billion USD and Toyota with 9.97 billion USD, both focusing on basic development and advanced technology development. Since the scale of investment in these areas is large, financial strength is an important factor. Meanwhile, many manufacturers cover expenses through alliances. VW will invest 73 billion EUR over the next five years from 2021 to 2025 to develop next-generation technologies, and Daimler will invest more than 70 billion EUR in electrification and digitization between 2021 and 2025 with the aim of ensuring leadership in the electric powertrain and automotive software areas. On the other hand, the investment scale of Kia (1.54 billion USD), Hyundai (2.86 billion USD) and PSA (3 billion USD) in basic development and advanced technology development is small. Investment is indispensable in product development, adaptation development and application development. For this reason, investment must be maintained at the same level or even increased regardless a company’s financial strength. MBD (model-based development), MBSE (model-based systems engineering) and virtual engineering are actively used to improve efficiency.