VW just pressed the future of electric vehicles in the United States – and it involves gasoline
This article was first published on GuruFocus.
Volkswagen AG (VWAPY) is making a calculated bet that the next step in its U.S. comeback may not start with a battery but with a tank of gas. The Scout revival, once imagined as a pure EV sequel to the classic American truck range, is now being rebuilt around gas-electric hybrids after more than eight in 10 reservation holders opted for plug-in or extended-range variants. In the U.S. market, where demand for electric vehicles has slowed over the past year, the appeal of EREV configurations capable of around 500 miles with mixed tank and battery operation could signal consumer caution, relevant to investors, about pure-electric range anxiety. Even electric pickup trucks like Tesla’s (NASDAQ:TSLA) Cybertruck have struggled to build lasting purchasing momentum, while General Motors and Stellantis have already scaled back their own electric truck plans. Scout CEO Scott Keogh said the company might consider canceling its Terra pickup if the segment fails to gain traction, although he stressed the brand isn’t making that call today.
A policy shift in Washington directly fuels this pivot. President Donald Trump and Republican lawmakers are working to ease what they describe as a mandate for electric vehicles by eliminating the $7,500 federal consumer credit and weakening fuel economy and emissions rules. The result has been a surge in sales of gas-guzzling SUVs while volumes of electric vehicles fall, reshaping demand patterns just as VW prepares the Scout’s return. Keogh said he would not shave $7,500 off the roughly $60,000 starting price of the Traveler SUV and Terra pickup to make up for the credit loss, adding that the brand may not need to make that concession. When Scout hits the market in late 2027, it could represent VW’s attempt to re-enter the United States with a product positioned directly in the most profitable segments, echoing Scout’s mid-century roots after VW acquired the lineage through Navistar in 2021.
VW is investing long-term capital behind this strategy, ranging from a $2 billion factory in South Carolina expected to begin production in late 2027 to a recently announced $300 million, 200-acre supplier park next door. Over the past year, Scout has collected more than 130,000 no-obligation reservations, of which around 73% lean in favor of the SUV over the pickup. Keogh says the brand’s timing could align with Americans’ preference for locally built vehicles, a trend potentially reinforced by Trump’s industrial focus on America. He also argues that the loss of the tax credit only affects Scout for about four years, since it was set to expire in 2032, and that VW is proposing a 50-year period rather than maximizing incentives that may or may not exist. Audi could potentially share the platform at the South Carolina factory, although nothing has been confirmed. For now, VW is positioning Scout to compete directly in segments that account for about 40 percent of the U.S. auto industry’s profits, an opening the company has been trying to capture for decades.
