Volkswagen Will Cut $1 Billion in Spending After Cheating Scandal

The cuts target marginal projects, including the next generation of the slow- selling Phaeton sedan, now delayed after previously being cut to only an electric version.

“We will strictly prioritise all planned investments… anything that is not absolutely necessary will be cancelled or postponed”.

Volkswagen CEO Matthias Muellerhad pledged a comprehensive review of the company’s spending priorities. But today, it only gave numbers for next year, and did not give a figure for r&d, which last year accounted for about a quarter of overall planned spending of 85.6 billion euros for 2015-19.

“What we definitely won’t do is make cuts at the expense of our future”, said Mueller.

The automaker has set aside more than $7 billion to cover the alterations, but the AP reports the total cost could be several times higher – and Volkswagen is also facing the possibility of billions of dollars in fines.

Volkswagen was also expected to discuss initial plans for recalling vehicles in meetings Thursday and Friday with USA and California regulators, according to the Wall Street Journal.

The painful and expensive fallout from the diesel engine cheating scandal – 11 million cars worldwide, including 500,000 in the US, were illegally rigged to pass emissions tests – claimed some big-dollar investments. The company estimates the scandal will cost it at least 8.7 billion euros.

Stertz said the software is legal in Europe and it’s not the same as a device that enabled four-cylinder VW diesel engines to deliberately cheat on emissions tests.

A California Air Resources Board spokesman said officials at the automaker are scheduled to meet Friday with CARB and the U.S. Environmental Protection Agency to present detailed proposals for recalling and fixing about 482,000 vehicles sold in the United States with diesel engines that emit more smog-forming pollutants than allowed by law.

The vehicles affected by the inconsistencies in carbon dioxide emissions include the diesel variants of Volkswagen’s Polo, Golf and Passat models, as well as the subcompact A1 and the A3 hatchbacks of the Audi premium brand, Skoda Octavia, Seat Ibiza and Seat Leon. The company has estimated the economic risk of the irregularities at another 2 billion euros.