Type VII U-boats, by Robert C. Stern, 1998 says the following;
"This sub-type was a design project only, intended as a testbed for the lightweight Deutz V-12 two-stroke diesels. Delay and eventual abandonment of the diesels's development caused the VIIE to be dropped. Except for the surface power plant the VIIE was to have been similar to the VIIC. The intent was to put the weight saved in the diesels into a thicker pressure hull, allowing deeper dives."