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VW to Change Diesel Technology, Cut Investments

FILE - A 2013 Volkswagen Passat with a diesel engine is evaluated at the California Air Resources Board emissions test lab in El Monte, Calif.

Volkswagen's flagship brand will switch to new diesel emissions control technology in Europe and North America as well as cut a billion euros ($1.1 billion) in annual investment spending.

VW brand head Herbert Diess made the announcement Tuesday as the company struggles to overcome a scandal over the fact that some of its cars are equipped with computer software that let them evade U.S. emissions tests.

Diess said the company would change its diesel technology in Europe and North America and install systems that that use a mixture of the chemical substance urea and water to reduce diesel emissions. He said that change would come “as soon as possible.''

He said the company would extend its low-cost manufacturing techniques and reduce spending on investments.

The company also plans to turn the next version of its large Phaeton luxury sedan into an electric-only vehicle to demonstrate the company's technological competence.

Volkswagen AG, which has other brands including Audi and Skoda, is facing a crisis after U.S. authorities said it evaded emissions checks on 482,000 vehicles. The company has set aside 6.5 billion euros ($7.3 billion) to cover the costs of recalls and fines. But analysts say the costs in terms of fines and lost sales will likely be considerably higher.

Earlier, the governor of Germany's Lower Saxony state, which holds a minority stake in Volkswagen, said the automaker should have admitted earlier that it manipulated emissions data in diesel vehicles.

VW acknowledged the deception to U.S. regulators on Sept. 3, more than a year after researchers published a study showing the real-world emissions of two VW models were far higher than allowed.

Governor Stephan Weil told Lower Saxony's state legislature on Tuesday that “this confession should clearly have come a great deal earlier - another serious mistake,” German news agency dpa reported.

Lower Saxony holds a 20 percent stake and Weil sits on Volkswagen's board of directors. He has said that the state's representatives were “completely surprised” by the emissions scandal and vowed to work to protect jobs.