The Volkswagen Group has undertaken a massive cost-cutting program in the wake of its ongoing diesel emissions scandal, a program CEO Matthias Müller says will lead to anything not being absolutely necessary either getting canceled or postponed.

A new design center plus a paint shop at a VW plant in Mexico have already been axed, and a new Phaeton, a vehicle that has been in the offing for several years already, has been delayed yet again.

Last year VW said a new Phaeton won’t arrive until 2018 or 2019, but we’ve since heard that the vehicle will be delayed even further. It will now most likely arrive around 2020.

There are no plans to drop the car, however, as VW sees the Phaeton as crucial for the Asian market, particularly China where the large sedan segment is still one of the most popular. But rather than launch a conventional model, VW now says the new Phaeton will be offered exclusively as an electric car.

Audi e-tron quattro concept, 2015 Frankfurt Auto Show

Audi e-tron quattro concept, 2015 Frankfurt Auto Show

To help reduce costs, Autocar reports the new Phaeton will borrow components from Audi’s Q6 e-tron, including the car’s MLB Evo platform. The Q6 e-tron is an electric crossover due in 2018 and previewed recently by the e-tron quattro concept.

We’ve also heard that VW is considering closing its bespoke Transparent Factory located in Dresden, Germany, which is responsible for the current Phaeton (the car is still on sale outside the United States). With the plant closed, VW would likely end up moving Phaeton production to a plant building other MLB Evo-based models.

Following the diesel scandal, VW is looking to clean up its image by focusing on vehicle electrification. The automaker is actually increasing to the tune of 100 million euros (approximately $106 million) its investment in vehicle electrification in the coming year, and this commitment to the technology will be further reinforced by the VW brand’s flagship being electric only.


Follow Motor Authority on Facebook and Twitter.