Amid VW Emissions Scandal, A New Tesla Model S Challenger Is In The Works: An Electric VW Phaeton

As the reputation of “clean diesel” small-car engines gets tarnished by Volkswagen AG’s massive diesel-emissions scandal, the world’s top automaker appears to be taking electric cars more seriously. After showing off its all-electric Audi SUV and its Porsche Mission E concept electric sports car last month, Volkswagen Group said Tuesday a fully electric VW-branded luxury sedan is on its way.

The company said as part of a major realignment of priorities in the wake of the diesel scandal it has “redefined” plans for the next-generation Phaeton, Volkswagen’s full-size luxury sedan flagship. It will now include an all-electric drivetrain. Due out as early as 2017, the new electric Phaeton -- originally rolled out in 2002 -- would go head to head with the Tesla Model S in Europe.

A Volkswagen spokesman said Wednesday there are no plans to offer the six-figure electric luxury sedan in the U.S. If it’s successful in Europe, however, it could snatch market share from Tesla Motors in an important region that will see an increasingly crowded market for luxury electric cars, especially if diesel engines suddenly become anathema in smog-choked European cities.

The Phaeton is the brainchild of former Volkswagen Group Chairman Ferdinand Piëch, who wanted a super-luxury car to go after rich buyers of the posh Mercedes-Benz S-Class and BMW 7 Series. The electric Phaeton would likely have a range comparable to the Tesla Model S. Volkswagen has said the Audi E-Tron Quattro SUV due out by 2018 would boast 310 miles of driving range per battery charge and that the battery will be charged to 80 percent capacity in 15 minutes, much faster than the current Model S and Model X SUV charging times.

Despite accolades, the Phaeton failed miserably in the U.S. against the company’s own lighter and more distinctive Audi A8. The Phaeton has seen modest sales among affluent European consumers who like the car’s understated profile and Volkswagen’s reputation for interior luxury comfort. The company didn’t say if the second-generation Phaeton would also come with an optional gasoline engine.

Volkswagen is likely to cope with its emissions-cheating scandal for quite some time. The company purposefully made “clean diesel” cars that deceived regulators and customers over their pollution levels, and now it’s trying to make some amends by rolling out a new electric-vehicle initiative.

Volkswagen also announced a so-called MEB Modular Toolkit, which will allow it to install electric powertrains in future models. This will give consumers the option of purchasing an all-electric or gas-electric plug-in hybrid version in a larger number of Volkswagen Group vehicles.