HomeFinance NewsVW's Strategy for Selling New EVs Could Lead to Problems

VW’s Strategy for Selling New EVs Could Lead to Problems

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In recent years, the variety of electric vehicles (EVs) available to consumers has significantly expanded. This growth includes offerings from innovative startups like Tesla, established automotive giants such as General Motors, and luxury brands like BMW and Porsche. The automotive market now presents a broad spectrum of electric vehicle options catering to various preferences.

Despite this variety, some consumers seek unique options, prompting companies to develop products for this niche. One such company is the German automaker Volkswagen, which has entered the electric off-road vehicle market with a lineup of rugged vehicles under the nostalgic Scout brand.

On the evening of October 24, Scout, a Volkswagen brand, disclosed concept models for its initial electric vehicle offerings: the Traveler SUV and the Terra pickup. These models mark Volkswagen’s new venture into electric vehicles, leveraging a name and image that resonate with long-time car enthusiasts.

Contrasting with contemporary “tough” electric vehicles like Tesla’s Cybertruck, Scout’s Traveler and Terra resemble the indestructible Nokia cellphones amid a world of iPhones. These new vehicles feature physical controls for essential functions, traditional door handles, and a body-on-frame construction akin to SUVs and pickup trucks like Chevrolet’s Silverados and Suburbans.

The Scout name was inspired by the International Harvester Scout, a vehicle regarded by historians as a precursor to today’s modern 4x4s. Built between 1961 and 1980, the Scout’s boxy design, off-road capabilities, and versatility earned it a cult following, including notable figures like Democratic Vice Presidential nominee Tim Walz.

Volkswagen acquired the successor to International Harvester in 2021, granting them access to the Scout trademark. This enabled Volkswagen to establish the Scout brand in 2022. The modern Scout vehicles offer off-roading capabilities reminiscent of Jeep commercials, along with a powertrain delivering 1,000 pound-feet of torque and a 0-60 mph acceleration time of 3.5 seconds.

In addition to fully electric versions, Scout Motors plans to release range-extended variants, labeled “Harvester.” These models incorporate a gas engine generator to extend their range from 350 electric miles to 500 miles. Scott Keogh, the president and CEO of Scout Motors, assured that the range extender retains the capabilities and functionality expected from an electric vehicle, including maintaining space for a front trunk (frunk).

Scout’s approach to sales diverges from its Volkswagen parent, opting to adopt a direct-to-consumer model similar to Tesla’s. Scout intends to bypass traditional franchise dealerships, instead choosing to sell its vehicles through retail spaces and service centers directly to consumers. This approach has sparked concern among franchise dealership owners, who have historically relied on state legislatures to maintain dealer franchise laws.

Although sales of the sub-$50,000 Scout vehicles are not expected to commence until 2027, the prospect of Volkswagen experimenting with such a sales model has resulted in discontent and resistance from dealership networks. In an April 2024 interview with Automotive News, Charlie Hall, a Volkswagen dealer owner and the Volkswagen National Dealer Advisory Council chairman, expressed willingness among dealers to showcase and sell Scout vehicles in their showrooms. Meanwhile, the Automotive Trade Association Executives have warned of potential legal action against Scout and Volkswagen.

According to National Automobile Dealers Association (NADA) CEO Mike Stanton, Volkswagen and Scout’s direct-to-consumer strategy could lead to legal challenges. Stanton remarked that their decision is disappointing, misguided, and would be contested. Attempts to engage with NADA by VW AG CEO Oliver Blume and Scout CEO Scott Keogh have been reportedly minimal. TheStreet has contacted Scout Motors for further comment on this matter.

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