Volkswagen's Scout Motors presents its first electric cars and plans for plug-in hybrids

NASHVILLE, Tenn. – VolkswagenThe Scout Motors-backed company unveiled its first electric vehicles on Thursday and announced plans to expand the brand's product range, which, in addition to electric vehicle models, also includes a new type of plug-in hybrid electric vehicles.

Scout, a former American vehicle brand from 1961 to 1980, was expected to offer exclusively electric vehicles so that the German automaker can expand its presence in the United States. However, the slower-than-expected adoption of electric vehicles and higher costs have led to a change that includes, of course, extended-range electric vehicles, or EREVs.

“Because we are a startup that moves quickly, we can change,” Scout CEO Scott Keogh, a longtime automotive executive who previously ran VW’s operations in the U.S., told CNBC. “The move we made a few months ago to offer range extenders was definitely a smart move.”

EREVs are essentially a type of plug-in hybrid electric vehicle. These include electric vehicle motors and battery cells, as well as a traditional internal combustion engine that powers the vehicle's electrical components when the battery loses energy. The engine essentially acts as a generator to provide power to the EV components when needed.

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

“We believe that electrification is the future. The range extender makes it an electric car and introduces people to electrification, but still has a super-smart, shall we say, 'backup plan,'” he said during an interview on Thursday. “It will drive like an electric vehicle.”

He said Scout has no plans to offer a traditional, non-electric vehicle with only 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 US sales market.

Keogh said the company aims to be operationally profitable within the first full calendar year of 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 the pickup truck of this size to the SUV of this size … those are the largest profit pools in the world,” Keogh said.

Being profitable during this period would be quite an achievement, as current EV startups such as Rivian Automotive And Lucid Group After several years, they lose tens of thousands of dollars for each vehicle they produce.

Meanwhile, Keogh said an announced software deal between VW and Rivian would have no impact on Scout's business. He called the $5 billion software deal, which includes the creation of a joint venture, an “exciting opportunity” for Scout.

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

The Scout plant in South Carolina will have a production capacity of 200,000 vehicles. Scout expects to use batteries – the most expensive part of an electric vehicle – from VW's joint venture battery cell maker in Canada.

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

Scout's first two vehicles will be the Traveler SUV and the Terra pickup, which are scheduled to hit the market in 2027.

The company unveiled “concept vehicles with production intent” outside Nashville, Tennessee, on Thursday – meaning they will be largely the same vehicles that will be offered for sale.

According to Scout, both the Traveler and Terra are expected to start between $50,000 and $60,000 with incentives available. Keogh said prices for the EREVs are also expected to be in this range. He wouldn't say whether they will cost more or less than the all-electric models.

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

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

The Traveler and Terra designs are modernized versions of previous Scout vehicles. They feature similar design features but have a sleeker, more stylish exterior. The interiors of the vehicles are equipped with large horizontal screens and soft-touch materials.

VW acquired the Scout brand and name after the global corporation acquired Navistar, a successor to Scout's original owner International Harvester, for $3.7 billion in 2021.

All-electric Scout vehicles are designed to climb 100% grades, accelerate from 0 to 60 mph in just 3.5 seconds, and deliver nearly 1,000 lb.-ft of power. torque, the company said.

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

The SUV is intended to be a competitor to Jeep's traditional off-road SUVs as well as the Ford Bronco and Toyota Land Cruiser. 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 pickup market in which Scout will compete remains an evolving market.

Automakers like GM and Ford rushed to bring all-electric pickup trucks to market earlier this decade to compete with several EV startups, many of which never materialized Tesla. Stellantis is expected to launch all-electric and full-size EREV pickups next year.

But after the vehicles were rushed onto the market, sales fell. Similar to the electric vehicle industry as a whole, the large vehicles no longer offered significant price premiums but now offered high incentives.

Motor Intelligence estimates a total of nearly 58,000 vehicles were sold in this electric “truck” market, including SUVs, in the first half of this year. That's less than 1% of the roughly 7.9 million new light vehicles sold in the U.S. during that period, 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. According to Keogh, more Scout products are expected to follow in the coming years.

“Can we think about downsizing at some point in the future? Absolutely,” he said. “You want to throw the arrow in the best spot first. And I think we achieved that between these two vehicles.”