Tesla, GM, and Volkswagen Each Lead the Car Industry in R&D Spending

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Does

Tesla spend the most money on research and development? Or is it

General Motors? Or

Volkswagen?

R&D dollars are getting closer scrutiny these days. Investors want to know which traditional car companies will develop low-cost batteries and attractive electric vehicles, and which EV makers will be the long-term leaders.

A stock blog declared Wednesday that

Tesla spends the most on research and development—per car—of any auto maker.

The data is easy enough to check. Most auto makers disclose the amount they spend on R&D. The number of cars sold over any period is similarly easy to obtain.

Tesla (ticker: TSLA) does spend a lot on R&D, but declaring Tesla the winner depends on how investors want to look at the data.

In terms of outlays per car sold, Tesla does indeed look like the leader. It spends more than $2,700 per car on research and development.

But there are a number of ways to measure R&D outlays. Spending as a percentage of sales is another way. By that measure, Tesla is in the middle of the pack, and

General Motors (GM) is in front.

From the perspective of absolute dollars spent, few can touch

Volkswagen (VOW3. Germany) and

Toyota Motor (TM). Volkswagen leads, but both spend more than $10 billion a year.

Tesla’s total spending comes closer to the bottom of the group.

That, of course, makes some sense. Tesla is still smaller, by sales, than many other auto makers. Volkswagen has generated about $227 billion in sales over the past 12 months. The figure for Tesla is about $54 billion.

What is counted as R&D can also change the way investor interpret numbers. R&D for many auto makers includes engineering work on coming vehicle launches.

Ford Motor (F) actually reports its number as “engineering, research and development.”

Engineering, though, doesn’t really qualify as pure research, and spending increases with the size of any auto maker. The more types of cars a company produces, the more parts it has to design.

As usual, reported numbers help investors, but they don’t tell the whole story.

Tesla is still the world’s most valuable auto maker, worth roughly 3.5 times the No. 2 company: Toyota. Tesla stock was up 1.3% in premarket trading on Thursday. The

S&P 500
and

Dow Jones Industrial Average
rose 0.4% and 0.3%, respectively.

Write to Al Root at [email protected]