BMW targets 10b euros pre-tax profit, votes 7b euros for electric cars

BMW targets 10b euros pre-tax profit, votes 7b euros for electric cars

By Tunde Osho

BMW will increase research and development spending to an all-time high of up to 7 billion euros ($8.6 billion) this year as part of efforts to bring 25 electrified models to market by 2025

BMW said that despite higher spending it expects group pretax profit to be over 10 billion euros in 2018, at least in line with last year’s level.

In its annual report, the company also warned of a possible impact from trade barriers and any anti-dumping customs duties in the U.S. and said Brexit could have an adverse long-term effect.

Spending on developing electric and autonomous cars pushed r&d costs a billion euros higher last year, reaching 6.1 billion euros.

“Investment will rise by a further high three-digit million-euro amount year-on-year, primarily from the ongoing new model initiative as well as continued work on e-mobility and autonomous driving,” BMW said in a statementat its annual press conference on Wednesday.

BMW’s r&d ratio for 2018 is expected to be between 6.5 percent and 7 percent of sales. In the next two years the r&d ratio is expected to remain above its usual target corridor of 5 percent to 5.5 percent range, the company said.

BMW this month reported a 5.3 percent rise in 2017 operating profit on surging demand for high-margin SUVs, helping to offset higher research spending.