BMW To Increase R&D Budget To Cope With Emissions And Electrification

The carmaker's Chief Financial Officer Nicolas Peter told Boersen-Zeitung in an interview, "Reducing CO2 emissions, electrifying engines and autonomous driving are the key challenges for our industry over the next years,"

He said that the R&D budget would account close to 6 percent of sales this year, which has been increased from 5.5 percent in 2016.

The German company is expecting its sales to grow slightly in 2016 compared with the 86.42 billion euros ($96.82 billion) generated in 2016, hinting R&D spending of more than 5.19 billion euros in 2017.

Carmakers for many years have strived to reduce the cost of electric cars, which have failed to with consumers because of their cost. Also, carmakers are required to lower the emissions of their vehicles and face decreasing demand for diesel cars.

German Chancellor Angela Merkel, also said it would be excellent for Europe's biggest economy to manufacture battery cells for electric cars locally and reduce dependence on Asian suppliers.

"And if we are part of the research, also with regard to the prototypes, then I think it improves the outlook of bringing modern production of next-generation cells back to Europe and Germany," she said.