Volkswagen really doesn't have a choice, does it?
On Friday, the embattled automaker's CEO, Matthias Mueller, announced the company's plans to cut annual capital spending from $13.9 billion to $12.8 billion amid its emissions scandal.
"We are operating in uncertain and volatile times and are responding to this," Mueller said in a statement, as reported by USA Today. "We will strictly prioritize all planned investments and expenditures. As announced, anything that is not absolutely necessary will be cancelled or postponed."
Given the fact, that VW is still trudging its way through its emission-cheating issues, as part of the worst scandal in the company's 78-year history, cuts were evident. However, even then, the $1.1 billion still hits you as a glaring number, perhaps insightful to just how bad it is right now for Volkswagen.
The planned slashing comes before Volkswagen embarks on its massive recall to bring 11 million faulty diesel vehicles to comply with emissions regulations — a severe undertaking that the mired automaker said it will start in January and end in late 2016, projecting the cost at $6.5 billion.
That cost doesn't include additional fees from possible countries' regulatory fines and class-action lawsuits from drivers. Volkswagen has already announced its goodwill packages in an effort to restore good faith with affected drivers, but a financial analyst told USA Today that the damages from the emissions scandal could rise to upwards of $21 billion when it's all said and done.
Still, Mueller has a company to run, and as part of the same announcement Friday, he vowed that Volkwagen would increase its spending on alternative drivetrain vehicles by $107 million per year. Before news of its emissions' scandal broke in September, VW had announced plans to roll out with 20 electric cars and plug-in hybrids by 2020. Even after the scandal surfaced, VW vowed to gradually change its emissions system from diesel to electric and plug-in technology and it seems like Mueller wants to drive the company into the future by making good on both those promises.
"We are not going to make the mistake of economizing on our future," he added. "For this reason we are planning to further increase spending on the development of e-mobility and digitalization."