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Federal Register / Vol. 86, No. 213 / Monday, November 8, 2021 / Notices
a technology or a new vehicle model to go from design to testing to production and sale. Todays high-tech vehicle is comprised of as many as 15,000 parts all performing specialized functions in carefully designed ways.168 The stakes for keeping pace on the development of technologically advanced and efficient engines, advanced powertrains, and better sensors are intense, and the advent of new technologies is forcing companies to augment R&D spending to remain competitive. The long lead-times for bringing technology to market and a
reliance on imported automobile parts increases the vulnerability of the United States.
As most automotive R&D is focused on new vehicle design and testing, significant money is spent on the development of engines, transmissions, and electrical equipment technologies that have national security applications.
Yet American-owned automobile producers have lagged behind their foreign counterparts in automotive R&D
spending. Table 13 shows that, in 2017, American-owned producers represented
20 percent of global R&D spending in automobile production and seven percent of global R&D spending in automobile parts, trailing behind the EU
and Japanese producers, which together controlled approximately 70 percent of global R&D spending in automobile production and nearly 90 percent in automobile parts R&D.169 For Americanowned firms, approximately TEXT
REDACTED.170 For EUand Japaneseowned firms, most R&D investments are made in their home countries.171

Table 13: 2017 Global R&D Spending by Company Nationality R&D for Automobile Parts Production
Billions lo of Global Total 20%
U.S.
16.2
40%
EU
32.2
Japan 24.5
30%
3%
Korea 2.4
6%
China 4.8
Source: PwC. 2017 Global Innovation 1000 Study.

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Table 14 below shows that, when global R&D is measured in relation to automobiles produced, Americanowned manufacturers outspent their EU
and Japanese counterparts $1,543 by American-owned firms compared to $1,480 by EU firms, and $1,009 by Japanese firms.172 However, this increased R&D spending per-unit highlights the impact of market share
168 American Automotive Policy Council, State of the U.S. Automotive Industry 2018, Aug. 2018, http www.americanautocouncil.org/sites/
aapc2016/files/2018%20Economic%20Contribution %20Report.pdf at 7.
169 PwC, 2017 Global Innovation 1000 Study, 2018, https www.strategyand.pwc.com/innovation 1000VisualTabs3.

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U.S.
EU

1.4
8.6

Japan Korea
0.6

China
0.3

9.0

lost to automotive imports, namely that American-owned firms need to have higher per-unit R&D expenditures relative to their foreign-owned competitors in order to offset the economic impacts of lost market share.
The reduced market share leads to a vicious cycle, with smaller production volumes reducing profits, which reduces funds to support overall R&D,
170 U.S.

Producers Survey Responses, Question
10a.
171 Stefan Di Bitonto, The Automotive Industry in Germany, Germany Trade & Invest, 2018, https
www.gtai.de/GTAI/Content/EN/Invest/_
SharedDocs/Downloads/GTAI/Industry-overviews/
industry-overview-automotive-industry-en.pdf; see Toyota Motor Company annual report, March 31,
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010 of Global Total 7%
43%
45%
3%
2%

which reduces innovation and leads to further losses of market share. China, which has the lowest per-unit R&D
expenditure, often conducts R&D
through joint ventures with foreign companies, lowering the amount of R&D
that needs to be performed by Chinese companies. Additionally, Chinese companies are able to amortize their R&D costs over a large production base.

2018, https www.toyota-global.com/pages/
contents/investors/ir_library/annual/pdf/2018/
annual_report_2018_fie.pdf at 46.
172 PwC, 2017 Global Innovation 1000 Study, supra.

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R&D for Automobile Production