Volvo will thoroughly scrutinise their R&D projects to determine which will survive as they try to recover from the coronavirus crisis. “There are thousands of projects within our R&D and we have to question whether we need to do them all,” Volvo CEO Hakan Samuelsson said. Vehicle facelifts are one area where the automaker might cut back, he said. “We need to reduce our cash burn.”
Volvo is not alone in making hard choices about their future projects. The coronavirus pandemic will cause automotive research budgets to decline by 17% this year and 12% in 2021, according IHS Markit, who say development budgets also are expected to suffer, dropping 13 percent on average in 2020 and 8 percent in 2021.
IHS Markit’s automotive supply chain and technology team surveyed 140 suppliers and automakers in Europe, North America and Asia. 28% of respondents said they expect revenue will be impacted beyond the next 12 months. Respondents also said they expect some R&D activities now outsourced to be brought in-house, especially at midsize and large automakers and suppliers.
Other projects are being postponed. According to the survey, there could be a six-month delay in mature projects and early-stage projects are most likely to be delayed by a year or more. “Electrification, autonomous driving and our future technology development are an absolute priority,” Samuelsson said. “Any changes there would jeopardise our strategy, so they will be really safeguarded. I don’t need an explanation on why we should slow down even more or shut down. What we need now are solutions. And if a solution doesn’t work then we need to change things quickly.”