Volkswagen  (VLKAY) is moving further away from diesel engines, the root of its recent legal and market woes.

At the Los Angeles auto show, Scott Keogh, head of VW's Audi luxury division in the U.S., introduced a plug-in gas-electric hybrid A3 that will be available shortly. Keogh also showed a fully electric, battery-powered SUV that he called "a concept," available by 2018.

Michael Horn, president and CEO of Volkswagen Group of America, apologized at the show, saying a solution for 482,000 diesel VWs with illegal emissions software "is coming soon." The German automaker has been embroiled in an emissions scandal involving its diesel cars all over the world.

The company has said that VW is dropping diesel models, such as those sold in the U.S. without special nitrogen treatment hardware, and moving expeditiously toward electrification.

"Audi's not a half-measure brand," Keogh said in Los Angeles. "When we go in, we like to do things right." 

On the VW brand side, the company said it's "reconfiguring" its development of a Phaeton flagship sedan as a purely electric vehicle with a long-range capability -- implying battery power. 

Since the beginning of the year, VW shares have lost about 30% of its value, the steepest decline coming after the U.S. Environmental Protection Agency accused VW on Sept. 18 of cheating on emissions tests. Since bottoming toward the end of October, VW shares have gained nearly 5%. 

Once a self-styled aspirant to take over the world's No. 1 position in automotive sales, VW now faces massive penalties and damages, plus the ire of consumers. Like other automakers, it must plan how to comply with ever tougher regulations covering fuel efficiency and tailpipe emissions.

VW and other German automakers have been heavily invested in advanced diesel technology, which they believed could be made clean and efficient enough to comply. The attempt to cheat the tests cast doubt on that belief, adding to the standing of consumer and health advocates that have opposed diesel.

Diesel, which is inherently more fuel efficient than gasoline, accounts for about half the European continent's vehicle market

Toyota  (TM - Get Report) , General Motors  (GM - Get Report) and Honda  (HMC - Get Report) have invested heavily in gas-electric hybrids as their technological approach to tougher regulations, lately emphasizing hydrogen-powered fuel cells, a form of electrification.

The rethinking by European regulators and automakers of diesel's future is unfolding behind closed doors. While too soon to predict the outcome in exact terms, the future likely will hold fewer and weaker incentives and subsidies for diesel and many more for other forms of alternatives to gasoline.

 

 

 

 

 

 

Doron Levin is the host of "In the Driver Seat," broadcast on SiriusXM Insight 121, Saturday at noon, encore Sunday at 9 a.m.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.