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Volkswagen Group has announced it’ll be making cuts of €1 billion a year in the wake of the dieselgate emissions scandal – with plans for electrification across the range and a flagship all-electric Phaeton taking priority.

The disgraced car giant has said it will accelerate its efficiency programme following the wrongdoing that saw shares plummet by 18%.

The next-generation Phaeton, which is expected to go on sale by 2020, will take on the Tesla Model S. In a statement, VW confirmed: “The specification [for the new Phaeton] features a pure electric drive with long-distance capability, connectivity and next- generation assistance systems as well as an emotional design.”

This will spearhead a drive for high-volume electric cars across the range with range of more than 300 miles.

VW passenger cars CEO Dr. Herbert Diess said: “We are very aware that we can only implement these innovations for the future of the Volkswagen brand effectively if we succeed with our efficiency programme and in giving our product range a new focus.

“Together with my Board of Management colleagues and the entire team we are working at top speed on these issues. Time and again, the Volkswagen team has proved it stands united and is fully focused on shaping the future, particularly when times are tough. We have now laid the further foundations for that.”

Volkswagen has said that it’ll continue to sell diesel cars – but, in Europe and North America, it will only modern diesels with selective catalytic reduction and AdBlue injection.

It’s yet to confirm where cuts will be made but expect niche models such as the new Bugatti hypercar to take a backseat.