Volkswagen's Scout Motors unveils its first electric cars, and plans to produce plug-in hybrid cars

NASHVILLE, TN – VolkswagenThe Scout Motors-backed company unveiled its first electric vehicle on Thursday and announced plans for the brand to expand its range to include an emerging type of hybrid electric vehicle as well as EV models.

Scout, a former American car brand from 1961 to 1980, was expected to offer exclusively electric vehicles in the German automaker's attempt to expand its presence in the U.S. However, slower-than-expected adoption of electric vehicles and higher costs has led to Change it. Of course that includes long-range electric vehicles, or EREVs.

“Being a startup that moves quickly, we can pivot,” Scout CEO Scott Keogh, a longtime auto executive who previously led VW's U.S. operations, told CNBC. “The pivot we made several months ago to offer a range extender was definitely a smart play.”

EREVs are essentially a type of hybrid electric vehicle. They include EV motors and battery cells, as well as a traditional internal combustion engine to power the car's electrical components when the battery loses power. The engine essentially acts as a generator to power the vehicle's electrical components when needed.

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

“We think electrification is the future. The range extender is setting it up as an electric car, so it introduces people to electricity, and yet it has a very smart backup plan, let's say,” he said during an interview on Thursday. “It will drive like an electric car.”

Scout has no plans to offer a traditional non-electric vehicle with only an internal combustion engine, he said.

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

Keogh said the company aims to be profitable on an operational basis during the first full calendar year after initial production of the vehicles, which will be built at a $2 billion factory under construction in South Carolina.

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

Turning a profit within that time frame would be a huge success, as is the case with current EV startups Rivian Cars and Lucid Collection They lose tens of thousands of dollars on every vehicle they produce after several years.

Meanwhile, Keogh said the announced software deal between VW and Rivian would not impact Scout's operations. He called the $5 billion software deal, which includes the creation of a joint venture, an “exciting opportunity” for Scout.

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

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

The company opened vehicle reservations on Thursday evening on its website. Scout plans to sell the vehicles directly to consumers rather than through a traditional franchised dealer network like VW in the United States

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

The company unveiled “production purpose vehicles” — meaning they are largely expected to be the same vehicles that will go on sale — on Thursday outside Nashville, Tennessee.

Both the Traveler and Terra are expected to start between $50,000 and $60,000 with incentives available, according to Scout. Prices for EREVs are expected to be in this range as well, Keogh said. He declined to say whether it costs more or less than fully electric models.

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

The EREVs will feature a range of more than 500 miles, according to the company, compared to a range of 300 miles for all-electric models.

The Traveler and Terra designs are updated versions of previous Scout vehicles. They feature similar design features but with smoother, sleeker exteriors. Vehicle interiors feature large horizontal displays and soft-touch materials.

Volkswagen acquired the Scout brand and name following the global group's $3.7 billion acquisition of Navistar, succeeding Scout's original owner International Harvester, in 2021.

The all-electric Scouts aim to climb grades at 100%, accelerate from 0 to 60 mph in 3.5 seconds and offer nearly 1,000 lb-ft. The company said of Torque.

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

The SUV is expected to be a competitor to traditional off-road SUVs from Jeep as well as the Ford Bronco and Toyota Land Cruiser. It's larger than the popular Jeep Wrangler, which is currently available as a hybrid electric vehicle.

The truck is a full-size pickup truck – a segment currently dominated by Ford, GM and Stellantis Ram brand. But the electric pickup market where the Scout will compete remains an evolving market.

Automakers like General Motors and Ford rushed to launch all-electric pickup trucks early this decade to compete against numerous electric vehicle startups, many of which never materialized. Tesla. Stellantis is expected to launch fully electric pickup trucks and full-size EREV trucks by next year.

But after the vehicles went on sale, sales slowed. As with the electric vehicle industry in general, large vehicles have moved from demanding large price premiums to high incentives.

Overall, the electric “truck” market, 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-duty vehicles sold during that period in the U.S., but a 35% quarter-over-quarter increase from the first quarter to the second quarter, according to the data.

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

“Could we consider downsizing at some point in the future? Absolutely,” he said. “You want to throw the dart in the best spot first. And I think we did that between those two vehicles.”