Volkswagen AG announced Tuesday it will slash investment by 1 billion euros ($1.1 billion) a year, in the wake of a massive emissions cheating scandal. The move comes amid continuing criticism of the German carmaker for its handling of the scandal that has affected nearly 11 million cars worldwide and has thrown the company into its biggest-ever crisis.
The company also outlined plans for focusing its efforts toward the development of plug-in hybrids and electric cars -- including redesigning its luxury sedan “Phaeton” as an all-electric model and fitting its diesel vehicles with exhaust emissions systems that use “the best environmental technology."
However, the company did not provide details of where and how the cost cuts would be implemented.
“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,” Herbert Diess, Volkswagen brand chief, said in a statement Tuesday.
Volkswagen’s use of “defeat devices” to cheat emissions tests in the U.S. came to light last month, leading to the eventual resignation of former Chief Martin Winterkorn and triggering widespread investigations into the carmaker’s practices.
According to analysts interviewed by Reuters, the company could face up to 35 billion euros in fines and legal costs in the U.S. and Europe. Moreover, in addition to wiping out nearly a third of the company’s market value, the scandal has also hurt investor morale in Germany, which fell sharply in October.
“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,” Diess added, in the statement.