- Scout Motors’ CEO thinks it’s “naive” for an automaker to hedge all of its bets on government policy.
- The $7,500 federal tax credit and other incentives will likely go away soon.
- Even so, Scott Keogh says Scout Motors is in a good position, thanks to its ties to the Volkswagen Group and its South Carolina factory.
Scout Motors is hard at work bringing the retro-looking Terra and Traveler battery-powered models to market, but it’s no secret that building any car today in America is getting harder and harder due to the constant policy changes that affect the industry.
From hiked import tariffs on battery components to China’s decision to limit the export of rare earth materials, electrified and electric vehicle manufacturers are having a particularly bad time. The solution would be to localize the supply chain and manufacturing process, but that can take years for a company that already has things going.
The Scout Traveler and Terra will be built at a new factory in South Carolina starting in 2027.
Photo by: Scout Motors
In Scout Motors’ case, however, the policy storm that hurt rivals is somewhat of a blessing in disguise for the Volkswagen Group-backed American brand. Speaking with Bloomberg, the automaker’s President and CEO, Scott Keogh, said that a car manufacturer should not rely on incentives to make ends meet, and that Scout Motors is in an excellent position to achieve what it wants, no matter what the government decides to do next.
“It’s naive to anchor everything you have on government policy, so government policy can move,” Keogh said. “Make a great truck at a great price, that people love, and that will put you in a good position. And that’s what we’ve always wanted to do.”
When it comes to the $7,500 federal tax credit, which will likely go away soon, including for those who lease, Keogh had this to say: “The consumer tax credits were always going away, so there’s no way you could live off of that. I think they were gonna be gone by 2032.”
“There’s a lot of drama and noise about the consumer tax credits, and of course, that’s an important thing, but there’s a lot of opportunity. We’re making heavy investments in the equipment down at the plant right now, so I think there’s a lot of opportunity and we like our position, frankly.”
Regarding the rare earths bottleneck, Scout Motors’ head honcho said the company is already reengineering some of the components that will be fitted on the Terra pickup and Harvester SUV, so that they use fewer rare earths.
“The math doesn’t change [regarding import tariffs and sourcing rare earth materials], and the math is: number 1, get the material cost down on the car, and that’s something we’ve been able to do very well.” He added that the biggest issue with most car startups is that they can’t get good deals on raw materials, whereas Scout managed to do that.
“We always intended to locally source. About 50% of our supply base will be 200 miles away from the factory, so insourcing was always the way to get it done,” the CEO said. “I think with rare earths, the big thing is you can make some engineering decisions where you use less rare earths, full stop, and that’s what we want to do. We have some good answers on brakes, some good answers on drive units, and we’ll use fewer rare earths. It can be done, and that’s how we’re engineering the vehicle.”
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Source: Scout Motors
A big part of Keogh’s positive attitude has to do with Scout’s primary backer, the Volkswagen Group, which is one of the largest car companies in the world. This inevitably helps Scout find much better deals compared to a traditional startup. “I think it’s a very good thing to have the backing of the Volkswagen Group,” he said. “If we go to a supplier as a startup, and we say we need 50,000 seats–that’s a whole different conversation than if we say we’re buying 10 million seats. You get much better terms of trade, which is fantastic.”
Scout Motors will build its SUV and pickup at a brand-new $2 billion factory in Columbia, South Carolina. Both models will be available as either full-on EVs or extended-range EVs. The former will be powered by nickel-manganese-cobalt (NMC) batteries that will enable a maximum range of around 350 miles. Meanwhile, the EREVs will function mainly as EVs, but with a gas generator that can replenish the batteries when there’s nowhere to plug in.
The EREVs will have cheaper and smaller lithium-iron-phosphate (LFP) batteries that will offer an all-electric range of around 150 miles on a full charge, while the total range, with the 15-gallon gas tank full, will be around 500 miles.