Volkswagen's Scout Motors reveals its first electric vehicles and plans for plug-in hybrids

NASHVILLE, Tenn. — volkswagenManufacturer-backed Scout Motors on Thursday revealed its first electric vehicles and announced plans for the brand to expand its lineup to include an emerging type of plug-in hybrid electric vehicle in addition to EV models.

Scout, a former American vehicle brand from 1961 to 1980, was expected to exclusively offer electric vehicles in a bid for the German automaker to expand its presence in the US. However, slower EV adoption from what was expected and higher costs have led it to change. Of course, and they include extended range electric vehicles or EREVs.

“As a fast-moving startup, we're able to pivot,” Scout CEO Scott Keogh, a veteran automotive executive who previously ran VW's U.S. operations, told CNBC. “The pivot we made makes a few months to offer a range extender was definitely a smart move.”

EREVs are basically a type of plug-in hybrid electric vehicle. They include electric vehicle motors and battery cells, as well as a traditional internal combustion engine to power the vehicle's electrical components when the battery loses power. Basically, the motor acts as a generator to power the electric vehicle components when needed.

Keogh said Scout added EREV to better protect the brand from any market volatility amid lower-than-expected consumer demand for electric vehicles.

“We believe that electrification is the future. The range extender sets it up like an electric car, so it introduces people to electrification, but it has a, let's say, super smart 'backup plan,'” he said during an interview. Thursday. “It will drive like an electric vehicle.”

He said Scout has no plans to offer a traditional non-electric vehicle with just an internal combustion engine.

The company's first vehicles (a full-size pickup truck and a large SUV) will cover about 40% of the highly profitable U.S. sales market.

Keogh said the company aims to be operationally profitable within the first full calendar year after initial production of the vehicles, which will be built at a $2 billion plant under construction in South Carolina.

“If you look at these profit pools, these two areas, from a pickup truck of this size to an SUV of this size…these are the largest profit pools in the world,” Keogh said.

Being profitable during that time period would be a success, as current EV startups such as Rivian Automotive and Lucid Group They lose tens of thousands of dollars on each vehicle they produce after several years.

Meanwhile, Keogh said the announced software deal between VW and Rivian will not affect Scout's operations. He described the $5 billion software deal, which includes the establishment of a joint venture, as an “exciting opportunity” for Scout.

“It's good for scaling. It's good for technology. It's good for everything,” Keogh said.

Scout's plant in South Carolina is planned to have a production capacity of 200,000 vehicles. Scout hopes to use batteries, the most expensive part of an electric vehicle, from VW's joint battery cell manufacturer in Canada.

The company opened reservations for the vehicles Thursday evening on its website. Scout plans to sell the vehicles directly to consumers rather than through a traditional network of franchised dealers as VW does in the US.

Scout's first two vehicles will be the Traveler SUV and the Terra pickup truck, scheduled to arrive in 2027.

The company revealed “concept vehicles with production intent,” meaning they are expected to be the same vehicles that go on sale, on Thursday outside Nashville.

Both the Traveler and Terra are expected to start between $50,000 and $60,000 with incentives available, according to Scout. Keogh said EREV pricing is expected to be in that range as well. He declined to say whether they will cost more or less than all-electric models.

The Traveler SUV is expected to account for two-thirds of the company's initial sales, Keogh said.

EREV vehicles will have more than 500 miles of range, according to the company, compared to 300 miles of range for all-electric models.

The Traveler and Terra designs are modernized versions of older Scout vehicles. They present similar design features but with softer and more elegant exteriors. Vehicle interiors feature large horizontal screens and soft-touch materials.

VW acquired the Scout brand and name following the global conglomerate's acquisition of Navistar, a successor to Scout's original owner International Harvester, in 2021.

The all-electric Scout vehicles are intended to climb 100% grades and accelerate from 0 to 60 mph in just 3.5 seconds and deliver nearly 1,000 pound-feet of torque, the company said.

Scout said the vehicles will use the North American charging standard, an 800-volt architecture with charging capacity of up to 350 kilowatts, and will be capable of bi-directional charging that will allow the vehicle to act as a generator.

The SUV is expected to compete with Jeep's traditional off-road SUVs, as well as the Ford Bronco and toyota Land cruise. It is larger than Jeep's well-known Wrangler, which is currently available as a plug-in hybrid electric vehicle.

The truck is a full-size pickup truck, a segment currently dominated by Ford, general motors and stellantis Ram brand. But the electric truck market in which Scout will compete is still a developing market.

Automakers like GM and Ford rushed to launch all-electric pickup trucks earlier this decade to compete with several electric vehicle startups, many of which never came to fruition, as well as tesla. Stellantis is expected to launch all-electric full-size pickup trucks and EREVs next year.

But after launching the vehicles on the market, sales slowed. Like the EV industry in general, large vehicles went from having significant premiums to being highly incentivized.

In total, this market for electric “trucks,” including SUVs, accounted for nearly 58,000 vehicles sold during the first half of this year, according to Motor Intelligence estimates. That's less than 1% of the roughly 7.9 million new light vehicles sold during that time in the U.S., but a quarterly increase of 35% from the first to the second quarter, according to the data.

Keogh believes Scout can differentiate itself in the market with its products, lower prices and brand appeal. Additional Scout products are expected to follow in the coming years, Keogh said.

“Can we consider downsizing at some point in the future? Absolutely,” he said. “First you have to throw the dart in the best place. And I think we have done that between these two vehicles.”