Volkswagen to cut investments by €1 billion per year

Volkswagen will cut spending by €1 billion per year in the wake of the dieselgate emissions scandal as well as re-focusing its development plans, as the firm seeks cut costs and reaffirm its environmental credentials among car buyers. VW traditionally invests around €10bn per year on research and development alone.

Among the most radical decisions is an overhaul of the VW Group’s approach to diesel engines. From now on, the group will only use modern diesel engines with selective catalytic reduction and AdBlue injection in Europe and North America – the two regions most heavily affected by its emissions scandal. Volkswagen brand’s newly formed Board of Management took these strategic decisions at a special meeting today. 

Development and modification of the group’s standardized MQB platform will also be accelerated, with a focus on bringing a new generation of plug-in hybrid vehicles to market. VW says it wants to produce hybrids with greater range, as well as developing new mass-market electric vehicles with a range of more than 186 miles. Alongside the new models, VW will also develop a new 48-volt mild hybrid system, as well as creating more efficient petrol, diesel and CNG engines.

Further, the next-generation Volkswagen Phaeton has been confirmed for production as an all-electric rival to the Tesla Model S.

The new car will “be the flagship of the brand’s profile over the next decade", the company has said. The Phaeton is expected to reach production in 2020.

Revealing details of the car's specification for the first time, Volkswagen says the car will feature "a pure-electric drive with long distance capability, connectivity and next-generation assistance systems.”

Wolfsburg insiders with knowledge of Volkswagen’s future model plans say the electric Phaeton will share its platform architecture, drive system and battery technology with the upcoming Audi Q6 etron – as previewed by the etron Quattro concept at the recent Frankfurt motor show.

Volkswagen will also create a new modular electric toolkit – dubbed MEB - which will be used across the VW Group brands. The toolkit be used for both passenger cars and LCVs and will be designed for all vehicle and body types. VW says the MEB toolkit will allow for “particularly emotional vehicle concepts, and will enable an all-electric range of 250-500km (155-310 miles)

Hinting that the Group is also well on the way to developing purely autonomous vehicles, the statement also says that: “A new standard with regard to connectivity and driver assistance systems is to be defined.”

Volkswagen will also accelerate its current efficiency programme. Company chairman Dr. Herbert Diess said: “The Volkswagen brand is repositioning itself for the future. We are becoming more efficient, we are giving our product range and our core technologies a new focus, and we are creating room for forward-looking technologies by speeding up the efficiency program."

“We are very aware that we can only implement these innovations for the future of the Volkswagen brand effectively if we succeed with our efficiency program and in giving our product range a new focus.

“We are working at top speed on these issues. The Volkswagen team has proved it stands united and is fully focused on shaping the future. We have now laid the further foundations for that."

More from VW Emissions Crisis:

- Carmaker's UK boss confirms EU emissions test results were affected

- The routine study that led to the discovery of the VW scandal

- Company chalks out plan to refit cars affected by emission scandal

- 6 things the carmaker could cut

- 11 million vehicles worldwide could be affected