BMW’s first-quarter operating profit fell 78 percent to 589 million euros, despite higher deliveries of luxury vehicles, as the carmaker felt the effects of higher investment spending and a 1.4 billion euro ($1.6 bln) legal provision.BMW said the decline partly reflected the costs of converting factories to make electric cars – with such investment rising 36% on the same period last year.

Excluding the impact of the legal provision, BMW’s automotive division delivered an operating margin of 5.6 percent in the first quarter.

Last month, the European Commission told German car makers they face hefty fines for alleged collusion in the area of emissions filtering technology.

The company said it would contest any fine, arguing the talks it engaged in were for the benefit of the environment and society as a whole as they move to bring down emissions further in the wake of the dieselgate scandal at rival VW.

To counter rising costs, BMW said it will cut the available engine and gearbox combinations by 50% and seek efficiency savings of more than €12 billion by the end of 2022.

BMW said the automotive profit margin will fall to between 4.5 and 6.5% for 2019, not the 6 to 8% expected earlier, and compared with the long-term profit margin target of 8 to 10%.