The Times Scandal hit VW switches to electric to power recovery...

The Times
Scandal hit VW switches to electric to power recovery
October 13 2015

VW said it would focus on "trend-setting new technologies" including electric carsLuke MacGregor/Reuters
Volkswagen will slash costs by £750 million a year and focus on the development of electric vehicles as the company battles to recover from the diesel pollution scandal.

The German car maker announced yesterday that annual investments would be cut by €1 billion and “accelerated efficiency measures” will be imposed as part of a major belt tightening exercise.

It is likely to mean that the development of many new vehicles and plants will be placed on hold. The firm has also refused to rule out job losses.

However, VW insisted that the changes would give the company “more room” to focus on “trend-setting new technologies”, including the further development of electric cars.

The comments were made in the wake of the biggest crisis in the company’s 78-year history after it was revealed that 11 million diesel vehicles worldwide had been fitted with software designed to cheat emissions tests.

The scandal has already wiped around a quarter off VW’s market value and led to the resignation of its long-serving chief executive.

Some analysts have claimed that the company will face a bill of more than £26 billion to recall and refit affected vehicles as well as covering the costs of regulatory fines and lawsuits.

Yesterday, it was revealed that the company had taken a number of strategic decisions designed to secure VW’s future.

Herbert Diess, the company’s brand chief, said that “investments will be cut by €1 billion per year and efficiency measures will be stepped up”.

He added: “The Volkswagen brand is realigning itself for the future. We will be more efficient, will reorganise our product range and core technologies and with the accelerated efficiency measures, we will have more room for trend-setting new technologies.”

The company said there would be a “major development” in plug-in hybrid vehicles with a greater range than existing cars, alongside the push for a new generation of high-volume electric cars that can travel up to 500km on a single charge.

VW also said the new version of its luxury Phaeton model would be electric.

In a further move, it announced a new “diesel strategy”, insisting that future vehicles will “only be equipped with exhaust emissions systems that use the best environmental technology”.

Mr Diess, who was appointed head of the VW brand in July, vowed to implement the new measures with “all our strength”.

“Even in difficult times, the Volkswagen team has again and again proved” its mettle, Mr Diess added.

Almost 1.2 million VW diesels in the UK have been fitted with the illegal “defeat device” software in the UK.

Earlier this week, the company’s UK managing director said around 400,000 of the vehicles would need an engine fix to deal with the problem as well as a software upgrade.

But Paul Willis denied that a decision was taken at the highest levels of VW to cheat emissions tests, insisting it was “implausible” that the company’s board knew about the scandal.

It echoed comments made last week by Michael Horn, VW’s US chief executive, who claimed that the deception was down to a “couple” of software developers in Germany.