This article first appeared on GuruFocus.
Volkswagen AG (VWAPY) is making a calculated bet that the next phase of its American comeback may start not with the battery but with the gas tank. The revival of the Scout, once envisioned as a pure EV sequel to the classic American truck line, is now being rebuilt around a gasoline-electric hybrid after more than eight in 10 reservation holders opted for plug-in or extended-range variants. In the U.S. market, where EV demand softened last year, the attraction toward EREV setups that deliver about 500 miles on mixed tank-and-battery runs may indicate investor-relevant consumer caution about pure-electric range anxiety. Even electric pickups like Tesla’s (NASDAQ:TSLA) Cybertruck have struggled to build sustainable buyer momentum, while General Motors and Stellantis have already cut back on their electric-truck plans. Scout CEO Scott Keogh said the company could consider canceling its Terra pickup if the segment fails to gain popularity, though he stressed the brand is not making that call today.
Policy changes in Washington are directly impacting this axis. President Donald Trump and Republican lawmakers are working to reduce EV mandates by eliminating $7,500 federal consumer credits and weakening fuel-economy and emissions regulations. This has resulted in sales of gas-heavy SUVs increasing while EV volumes have declined, a shift in demand patterns as VW prepares for the return of the Scout. Keogh said he wouldn’t cut $7,500 off the roughly $60,000 starting price of the Traveler SUV and Terra pickup to compensate for the credit loss, saying the brand probably didn’t need that concession. When the Scout hits the market in late 2027, it could represent an effort to re-enter the U.S. with product aimed directly inside VW’s most profitable segments, echoing the Scout’s mid-century roots after VW acquired the Pedigree via Navistar in 2021.
VW is putting long-horizon capital behind this strategy, from a $2 billion South Carolina factory slated to start production in late 2027 to a newly announced $300 million, 200-acre supplier park next door. In the past year, Scout has collected more than 130,000 non-binding reservations, about 73 percent of which are inclined toward SUVs over pickups. Keogh says the brand’s timing may be in line with Americans’ preference for locally made vehicles, a trend potentially strengthened by Trump’s America-first industrial focus. They also argue that the loss of the tax credit only affects the Scout for four years as it was previously set to expire in 2032, and that VW is making a 50-year call rather than optimizing for incentives that may or may not exist. Audi may eventually share the platform at the South Carolina plant, although there is no confirmation. For now, VW is preparing the Scout to compete directly in the segment that accounts for about 40 percent of U.S. auto-industry profits, which the company has been trying to capture for decades.
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