VW to cut investment by €1bn and focus on "an electric future"
Volkswagen has said it will cut investment by €1b a year to cope with the financial implications of the diesel emissions scandal, however, the company did not provide details of where and how the cost cuts would be implemented. The investment cut will be coupled with new projects such as an electric passenger car and light commercial vehicles and more focus on its Phaeton model, which it plans to make purely electric and capable of driving long distances on a single charge. The Phaeton will apparently lead VW’s “charge to an electric future”. 

The Volkswagen diesel-emission cheating scandal has caused executive heads to roll, cars to be yanked off sale, and regulators to pore over real-world emission data with a laser-like focus.

It has made the future of the VW Group as the world's largest carmaker seem far more perilous than it did just one month ago.

This morning, the company's board of directors released a statement laying out its plans to move forward, even as it cuts capital investments by 1 billion Euros ($1.14 billion) to cope with the crisis.

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It contains a laundry list of adjustments to VW's planned future technology investments, including more focus on electrified drivetrains.

First, Volkswagen said that it will sell only the cleanest diesel vehicles in Europe and North America.

"Diesel vehicles will only be equipped with exhaust emissions systems that use the best environmental technology" in those markets, which is Selective Catalytic Reduction--also known as urea injection. (The rest of the world, however, will apparently not be quite so lucky.)

2015 Volkswagen e-Golf - Long-term test car

Second, the company will further develop its high-volume MQB architecture, the front-wheel-drive toolkit on which the VW Golf and Audi A3 are now built.

VW has said in the past it will offer up to two dozen future models on this architecture, totaling up to 4 million vehicles a year globally.

"The focus is on plug-in hybrids with an even greater range [and] high-volume electric vehicles with a radius of up to 300 kilometers," according to the board statement.

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There will also be versions with a 48-volt power system, for enhanced start-stop and mild-hybrid applications, along with "ever more efficient diesel, petrol and CNG concepts."

More specifically, VW Group will develop a new "MEB Modular Toolkit" for future compact vehicles. The company's statement on that new architecture reads, in full:

An MEB electric toolkit for future use in compact segment vehicles is to be developed based on the experience gained with existing vehicle architectures. This will be a multi-brand toolkit suitable for both passenger cars and light commercial vehicles and will thus leverage synergies from other electric vehicle projects in the Group.

2016 Audi A3 e-tron plug-in hybrid

The standardized system will be designed for all body structures and vehicle types, thus allowing particularly emotional vehicle concepts, and will enable an all-electric range of 250 to 500 kilometers.

In other words, electric cars and plug-in hybrid vehicles with longer electric ranges will have their own dedicated architecture (though likely derived in some aspects from the existing MQB toolkit).

That's a significant advance from a company whose director of diesel programs sneered openly at hybrids just five years ago, saying smarter consumers would buy clean diesels instead.

MORE: Why Did Volkswagen Cheat On Diesel Emissions In Its TDI Cars?:

Today, there are just four plug-in vehicles of any type in production on the MQB architecture--and only two of them are offered in North America.

Those are the Volkswagen e-Golf hatchback, a battery-electric model with an EPA-rated range of 83 miles, and the Audi A3 e-tron, a plug-in hybrid whose official electric range hasn't yet been released.

That same plug-in hybrid system is used in two models on sale only in Europe, the Volkswagen Golf GTE and Passat GTE. (The U.S. Passat is a different vehicle from the newer-generation Passat now sold in Germany.)

2016 Audi A3 e-tron plug-in hybrid

With BMW planning to launch its second-generation Power eDrive plug-in hybrid system, which will offer electric ranges of 50 miles or more, and the 2016 Chevrolet Volt rated at 53 miles of electric range, VW clearly sees it will need to boost the all-electric range of the future plug-in hybrids it expects to launch.

And there will be a lot of those: Now-deposed CEO Martin Winterkorn said last month at the Frankfurt Motor Show that the VW Group would launch 20 plug-in hybrids by the end of the decade.

Similarly with battery-electric cars, with the advent of the 200-mile Chevy Bolt EV, a much longer-range second-generation Nissan Leaf close behind it, and the theoretical launch of the 200-mile Tesla Model 3 by the end of 2017, VW's next all-electric cars must have much longer ranges to be competitive.

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It's a remarkable turnaround for the company more identified with its so-called "clean diesels" both in Europe and North America than for anything with a plug.

And it indicates that despite the company's pledge to sell only the cleanest diesels in those two markets, it sees more promise in vehicles that can run without emitting anything at all for some or all of their miles.

Whether VW Group can accelerate its plans to keep its electrified offerings at the cutting edge remains to be determined.

2016 Volkswagen e-Golf

At the moment, BMW, General Motors, and Nissan appear far ahead in experience, sales, and commitment.

And any company that makes 10 million cars a year is a large ship to turn--even with the shock and disruption from a crisis as major as the diesel-emission cheating scandal, now only in its fourth week.

Still, there's more likelihood today that VW will get serious about a push into plug-in cars than there was a month ago.

And as with the diesel mess, there will be many more stories to come on this topic too.

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