I was recently talking with the company’s treasurer about the challenges facing OEMs in regards to meeting the 54.5 mpg CAFE requirement by 2025 and the various lightweighting and alternative powertrain technologies that are being developed and deployed.
And being the good money steward he is, he brought to my attention an item from a CPA and advisory firm, Battelle Rippe Kingston on R&D credits that manufacturers may be able to get from local, state or the federal government.
According to the firm, “R&D” isn’t simply about researching and developing things (e.g., batteries or new materials), but actually manufacturing operations.
Battelle Rippe and Kingston write:
“Examples of automotive initiatives that may be eligible for R&D tax incentives include:
- Automation of manufacturing processes
- Exploration of new material use (e.g. high tensile steel, composites, aluminum, stamping process/technologies, etc.)
- Trials to improve process efficiencies, throughput or reduce waste/costs
- Designing and fabricating prototypes or tooling
- Process development to increase reliability, increase efficiencies or throughput
- Design and development to improve vehicle performance, e.g., aerodynamics, fuel efficiency, etc.
- Feasibility studies of concept vehicles and technologies
- Development/perfection of new material bonding technology (e.g. friction welding, 3-d lock seams, etc.)
- Manufacturing trials to resolve technical challenges with scaling up new products to full-scale production
- Prototype testing of vehicles and components resulting in a new or improved product
- Improvements in structural performance or crash worthiness”
All of which is to say that the road to 2025, while it won’t be smooth and will involve, undoubtedly, many detours along the way, can conceivably somewhat less expensive than might have otherwise been thought, at least vis-à-vis taxes.