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Bloomberg: 'Big Auto Isn't Going To Win If It's Too Busy Paying For Past Mistakes'

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Bloomberg: 'Big Auto Isn't Going To Win If It's Too Busy Paying For Past Mistakes'

Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) was the largest spender of R&D in the world with its secretive and futuristic Google X segment. Right?

Wrong.

Volkswagen AG (ADR) (OTC: VLKAY) (OTC: VLKPY) holds the title as the biggest R&D spender, as it dished out $15.1 billion over the past 12 months, according to Bloomberg. In fact, the auto industry as a whole has spent $71 billion on R&D spend over the past year, ranking only behind healthcare and computing and telecommunications firms.

Related Link: Have We Reached Peak Auto? Not Even Close

Given the high R&D spending, it may be confusing to some to learn that automakers are planning on slashing their budgets — at a time when the industry appears to be racing to become the first company to offer a viable self driving car.

According to Bloomberg, R&D spend by the largest U.S., German and Japanese carmakers fell last year for the first time since 2009.

So why the sudden shift? It might have to do with the never ending fuel emission and safety standard penalties that are eating up a larger portion of companies dollars.

Volkswagen's diesel-testing scandal could end up costing the company as much as 78 billion euros. And then there is the Takata airbag scandal and General Motors Company (NYSE: GM)'s ignition scandal. In fact, the list of companies that may be forced to dish out penalties extends beyond this small sample.

"With 14.5 million vehicles expected to be sold with autonomous features by 2025 and self-driving kits alone likely worth $42 billion, the race to be first will be expensive, and brutal," Bloomberg's report concluded. "Big auto isn't going to win if it's too busy paying for past mistakes."

Posted-In: auto manufacturers Automakers R&D Bloomberg car makersTravel Media Trading Ideas General Best of Benzinga

 

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