BMW is betting that it can beat Tesla to designing and distrubuting the first self-driving car.
The German automaker announced last March a five-year plan to achieve this goal, citing new partnerships with Intel and Mobileye to take drivers from the “present frontier (between ‘hands-off’ and ‘eyes-off’ driving) to the future (‘mind-off’).”
BMW bets it has the stamina and, more importantly, the cash flow, to win this race.
Marking a record-setting second quarter, BMW reported revenues were up 4.5 percent (to over $28 billion dollars) and net profits rose 11 percent (or, well over $2 billion). CEO Harald Krüger wants to use the dramatic increase in profitability to “fund innovation in power-train technologies and digitalisation,” reports the Financial Times.
Juxtaposing Tesla’s second quarter numbers with BMW’s, and Kruger’s projections are not implausible.
Tesla, the market leader in all-electric cars, has recorded cash loses of $1.1 billion since 2010 and is expected to post $1.6 billion in losses on Wednesday. BMW, which created it’s first electric car in 2011, has stated it is “making a profit on every car sold,” reports the Financial Times.
Include capital expenditures, and Tesla losses rise to some $4.5 billion. Between now and 2020, analysts at Morgan Stanley predict that Tesla will spend $14.4 billion on research and development, reports the Financial Times.
Falling car sales throughout the US could hinder BMW’s ability to reinvest profits, an essential component in accomplishing its goal.
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