Volkswagen Cuts Investments by €1 Billion in 2016, Delayed Phaeton Was an EV

Volkswagen's management board usually meets this time of the year to discuss Christmas bonuses and trending vacation sports. But the new CEO, Matthias Muller, has sobering news for us today, as the biggest carmaker in Europe will cut "investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex)" to €12 billion, down one full billion euros ($1.1b) compared to previous targets.
VW will spend 1 billion euros less in 2016 1 photo
Photo: Catalin Garmacea
Details are somewhat sketchy, but we believe everyone will want to hear about the new Phaeton. The rumors that it's being delayed were true, as the flagship model originally expected in 2019 has been delayed indefinitely. And get this: it wasn't supposed to be powered by a W12 or even a hybrid V6 engine, but a "pure-play electric" system. Are we reading this right?

"We will review and potentially cancel further expenditures or spread them out to a greater extent in the next few weeks, but without putting our future viability at risk," explained Müller. "Together with the Works Council representatives we will make every effort to keep our core workforce on board."

Some models will get the boot, of course. Volkswagen's dozen brands sell approximately 300 models, which can't survive in the context of a global scandal that's now believed to cost about €20 billion to fix.

However, nobody in VW land seems to want to give up on anything other than the Phaeton. Most of the remaining 12 billion euros for 2016 will go towards the development and launch of the all-new Golf VIII, the Audi Q5, the new VW Crafter plant in Poland, as well as "upfront expenditures for the modularelectric toolkit (MEB)."

While Muller is delaying the opening of some production facilities and may end up closing the Dresden factory that makes the Phaeton, he's giving €100 million more than planned to the people making EVs.

"We are not going to make the mistake of economizing on our future. For this reason we are planning to further increase spending on the development of e-mobility and digitalization," he said.

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About the author: Mihnea Radu
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Mihnea's favorite cars have already been built, the so-called modern classics from the '80s and '90s. He also loves local car culture from all over the world, so don't be surprised to see him getting excited about weird Japanese imports, low-rider VWs out of Germany, replicas from Russia or LS swaps down in Florida.
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