Volkswagen Slashes Capital Investment By $1 Billion In The Wake Of Dieselgate

Good Morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.

1st Gear: Spending Cuts At VW

We already know that the diesel emissions cheating scandal is going to be very expensive for Volkswagen. Capital investment in things like factories is the next to get slashed, according to Reuters, as they prepare to pay for fines, lawsuits, recalls and other costs:

Volkswagen (VOWG_p.DE) is set to announce its first cut in capital spending since the 2009 financial crisis, a sign of how the German carmaker's emissions-cheating scandal is weakening the position of its labor unions.

The supervisory board of Europe's largest car manufacturer will approve the cuts on Friday, sources familiar with the matter told Reuters, as the company prepares for the multi-billion euro bill to clean up its biggest ever business crisis.

Analysts on average expect Volkswagen (VW) to cut annual spending on factories, models and equipment by 10 percent from the 17.1 billion euros ($18.4 billion) announced last year. That figure was almost double the 8.6 billion average for 2010-12.

That could potentially include the closure of the so-called "transparent factory" (pictured above) where VW builds the Phaeton sedan in Germany, according to Automotive News. The company's supervisory board is set to discuss today whether that factory, which builds eight Phaetons a week, will survive or be re-tooled somehow.

2nd Gear: But The Fix May Cost Less Than Expected?

At the same time Reuters cites a report from a German magazine that fixing at least some of the cheating engines, the 1.6-liter models (not sold in the U.S.) could be as low as about ten bucks a car:

Volkswagen (VOWG_p.DE) will probably incur much lower costs than expected for recalling 2.4 million diesel-powered cars in Germany fitted with illegal emissions-control software, German magazine Wirtschaftswoche reported on Thursday.

It did not cite a source for its information.

The technical fixes for 1.6 liter diesel engines require installing a 10-euro ($10.74) sensor inside the air filter and a software update, the weekly magazine said. A simple hardware solution could reduce total recall costs for the 11 million affected vehicles worldwide by 3 billion euros and enable VW to fix the cars more rapidly.

Grain of salt on that last one.

3rd Gear: Microsoft, Volvo Team Up For Hologram Test Drives

In the future, there will be holograms! At least, that's what Microsoft and Volvo are working on together. Bloomberg reports the two companies are "working together to bring Microsoft's HoloLens augmented-reality goggles to Volvo showrooms next year to spruce up safety-feature demonstrations, car customization — and yes, test drives":

In a prototype demonstration at Microsoft's headquarters in Redmond, Washington, the companies used HoloLens to show off Volvo's new S90 mid-size luxury sedan, announced in September and set to be unveiled to the public at this year's Detroit Auto Show.

Using the device, the companies displayed full-size three-dimensional holograms of the car itself and cross-sections of its parts, as well as a holographic test-drive demonstration of the semi-autonomous driving system and its safety features.

Holograms!

4th Gear: Amazing What You Get On A Small Car These Days

Like its big brother the Hyundai Sonata, the newly-unveiled Hyundai Elantra is a little more boring to look at, but now with the right options it's another small, affordable car with tech you could only get on an S-Class or something similar just a few years ago. Here's Automotive News:

Today at the Los Angeles Auto Show, the Korean automaker unveiled a sixth-generation Elantra crammed with safety and connectivity technology to fend off a newly redesigned Civic and Nissan Sentra.

At higher trim levels, the Elantra will offer automatic emergency braking with pedestrian detection; lane-keeping assist; blind-spot monitoring with rear cross-traffic warning, and lane change assist. Also available are headlights that bend to illuminate corners as the driver makes a turn, and adaptive cruise control.

Fascinating how that works.

5th Gear: Blame Facebook And Twitter

The United Auto Workers union hasn't had an easy time getting contracts ratified with any of the Big Three automakers. No doubt it's because of the complexity of those deals and making everyone happy, but according to The Detroit News, social media has changed the game a bit too:

Blame, well, who — or what? Until now, the underappreciated power of Facebook and Twitter to turbo-charge critiques and outflank union leaders long accustomed to telling members what's good for them and expecting enough of them vote accordingly? Partly.

Union leaders who struggle to understand how quickly the information landscape is changing, how smartphones can consume far more information far more quickly than any union hall meeting can dispense? Partly. Even corrections following rejection of the Fiat Chrysler Automobiles NV deal aren't proving enough to get deals with General Motors Co. and Ford Motor Co. ratified.

6th Gear: LA Auto Show Roundup!

The automotive world is nice and hung over (or in our case, still intoxicated) from the LA Auto Show this week. The last big American auto show of 2015 saw dozens of new car debuts, respectable updates, questionable decisions and ridiculous concept cars.

I've taken the liberty of rounding up most of our coverage right here:

Reverse: The Man Behind Yellow

Neutral: To Live And Die In LA

What LA Auto Show debut has you most excited, and what concept are you hoping will become real?

Photo credit AP

Contact the author at patrick@jalopnik.com.