Daimler spends big to compete with Tesla

Technological advancement is coming fast and furious today, especially in the areas of energy and transportation.  This is exciting but it will also require a lot of capital investment to make these transitions.  That means less corporate profits and excess cash for non-productive rents like share buybacks and dividends.  More reasons not to pay today’s extreme multiples for share ownership.  See:  Daimler spends big to compete with Tesla:

Management expects revenue and profit to increase again this year, thanks to ongoing growth in China and Europe, a recovery in other emerging markets and a fresh model lineup. Crucially, though, the German industrial giant isn’t counting on growth in the free cash flows that fund its big dividends.

The key reason: heavy investment in future technologies, namely electric powertrains, self-driving features, web-connected cars and the smartphone-enabled car-hailing or carpooling services pioneered by Uber. Last year Daimler’s investments, including spending on plants and equipment and research and development, totaled €13.5 billion ($14.56 billion)—8.8% of sales and 16% ahead of the 2015 level. This year spending is expected to rise a further 13% to €15.2 billion, and stay at that level in 2018.

This entry was posted in Main Page. Bookmark the permalink.