The next-generation Volkswagen Phaeton is in for a ground-up rethink, due to competition from the all-electric Tesla Model S. Any new, large VW sedan will have to incorporate next-generation technology, said Volkswagen brand chief Herbert Diess.

“We were quite far advanced with the next Phaeton but it became clear it wasn’t enough of a leap forwards. A modern large saloon has to be competitive and have an advantage over the Tesla, which is the benchmark and in many regions dominates the segment. Now, if we go back there, we have to take Tesla seriously, and of course that is what we are doing with our electric strategy,” Diess said to Autocar.

Discontinued in 2015, the VW Phaeton struggled against more established makes such as Mercedes-Benz in the luxury sedan segment; Volkswagen sold 4,000 units of the Phaeton in 2014, compared with 100,000 units Mercedes-Benz managed with its S-Class that year. Plans for the discontinued Phaeton’s successor have been delayed before due to costs, even prior to the company revamping its Phaeton goals.

In light of the company-wide re-alignment of goals in the aftermath of the diesel scandal, the Phaeton is expected to be built upon the group’s MEB electric car platform, which is telling of its intended direction with the luxury sedan. The new model is expected to see its launch in 2020, and rumour has it that the car may not even retain the Phaeton name, such is the extent of departure from the earlier car.