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Matthias Mueller, CEO of Volkswagen Group, speaks to the media following a meeting of high-ranking Volkswagen managers on November 20, 2015 in Wolfsburg, Germany.
Alexander Koerner—Getty Images

Volkswagen announced Friday that it will cut around $1 billion in spending in 2016 as it copes with the still-ballooning costs of its emissions cheating scandal.

The German automaker typically has capital expenditures of about 13 billion ($13.84 billion) per year. Next year the figure will drop to 12 billion ($12.78 billion), the Wall Street Journal reports.

Several projects are being put on hold, including a plan to retool the Phaeton luxury sedan into an electric vehicle that competes with Tesla and the construction of a new design center. “We will strictly prioritize all planned investments and expenditures,” Volkswagen CEO Matthias Müller said. “As announced, anything that is not absolutely necessary will be canceled or postponed.”

The company is expected to be forced to pay many billions of dollars in fines and litigation fees over its use of special software in cars that caused them to emit less pollutants when being tested by regulator. The software, known as a defeat device, was installed in millions of diesel cars around the world.

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