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I just randomly picked Ford for this. Ford had like 176 billion in revenue last year, but their cost of goods was like 150 billion and their final net income wa
by icegreentea2 3y ago
I just randomly picked Ford for this. Ford had like 176 billion in revenue last year, but their cost of goods was like 150 billion and their final net income was 4.35 billion. Ford sells on the order of 5 million vehicles per year.
If you can generate $50 dollars of COGs reduction in a car, that's 250 million per year. Yes, that's basically nothing in terms of their COGs, but that's like 5% increase in net income (if they can channel all of the savings into the net income anyways). Alternatively, if you want to be less cynical, Ford's R&D budget comes from that ~20 billion dollar slice between their revenue, COGs and final net income. 250 million is still a pretty ~1% slice of their R&D budget.