I end up in a large number of conversations about the eventually-to-be-relaunched Scout brand. Or, well, I end up in a lot of conversations, proportionally, when you consider the company has produced exactly zero trucks, and won’t sell any to customers for a couple of years. New reporting shows that there are a lot of people around VW who question if it’s worth all the effort. The CEO of Volkswagen is not one of them.
As mentioned in yesterday’s Morning Dump, Tesla’s positive earnings don’t seem to be moving the needle on the company’s share price as the huge investment being promised in the name of AI and robots seems like it’ll eat up a lot of cash flow. The timing is curious, as gas prices are up and there’s new evidence from an interesting source that EVs are becoming more popular.
There’s a new mantra in the world of Chinese cars, and it’s specifically targeted at the world.
Volkswagen Stakeholders Have Their Doubts About Scout, Volkswagen Leadership Seems Pretty Gung Ho
There are two groups of people who appear to be excited about Scout: Enthusiasts and VW CEO Oliver Blume. That’s not a bad mix of people, honestly. It’s hard to say how well an EV-anything or an EREV is going to perform in the United States, but the truck and SUV look legit. David flew out to look at it and ended up pre-ordering one, and he knows a thing or two about a thing or two when it comes to off-roaders.
That doesn’t mean everything is hunky-dory in Scout-land. Volkswagen is dramatically cutting back on production in the face of challenges in Europe, the US, and China. This means the attention and investment in Scout is being looked at suspiciously in some circles. There are the dealers, who view VW’s plan to not use dealers as an existential threat. There’s the market itself, which has looked skeptically at EV trucks. And then there’s the matter of delays, with the Scout project being pushed back to 2027-2028, which is so far away.
Manager Magazin adds some more color to the doubts flying around Wolfsburg:
Doubts persist even within top management. And the employee representatives on the supervisory board are already grumbling. Why invest billions in a project with uncertain success when new rounds of cost-cutting are underway in Germany? The works council, led by Daniela Cavallo (51), has requested an in-depth investigation by the supervisory board.
The most entertaining tidbit is that various big consulting agencies (BCG, McKinsey, et cetera) were asked to pitch VW on its massive transformation plan. That’s a juicy contract and, coincidence or not, the company that said to delay Scout a few years apparently didn’t get the contract.
What does Blume think about all this? In an interview with the magazine he said he still was planning to go forward with Scout and the factory in South Carolina but, boy, wouldn’t it be nice to share that platform?
You’re also discussing the future of your plants in North America. You’re negotiating with potential partners about collaborating on your Scout pickup truck project. How far along are you with those discussions?
There’s a lot of interest. These are great cars that fit perfectly into this market. Partnering with others would be a way for us to minimize risk. We could share the investment with other companies, and the partners could, for example, use our platform. However, we haven’t made a decision on that yet.
Obviously, one of those partners needs to be Audi, which could build a Defender-competitor on the platform. Not all VW dealers are also Audi dealers, but maybe enough of them are that this might also placate some percentage of the company’s dealer network. That’s left pocket-right pocket, though, and it seems like Blume wants a company to help minimize the risk that isn’t the same company.
My question is: If Volkswagen doesn’t find a partner will it still go forward with the plant, or delay again? How badly does VW want this?
Tesla Will Invest $25 Billion In AI, Robotaxi, Optimus
What do Tesla investors really want at this point? It’s hard to follow, and I follow this stuff professionally. Earnings and revenue weren’t great last year, but the stock price rallied in December with a promise of big investments in AI. Last quarter, earnings were actually positive and the company announced even more money to get spent on robots, AI, et cetera. From the company’s call yesterday, here’s CFO Vaibhav Taneja:
On free cash flow, we ended the quarter with just over $1.4 billion. As Elon mentioned, we are in a very big capital investment phase, which is going to start now and would last a couple of years. So based on that, our current expectation for 2025 — 2026 is over $25 billion of CapEx. And just to remind you, we are paying for 6 factories which were going to go into operation. Some have already started, some would go into operation later part of this year. We’re further increasing our investment in AI-related initiatives, including the AI infrastructure to support Robotaxi and the launch of Optimus. We’ve already started placing orders for the research semiconductor fab in Austin and for solar manufacturing equipment. While this may seem a lot and will have the impact of negative free cash flow for the rest of the year, we believe this is the right strategy to position the company for the next era. We’ll make such investments in a very capital-efficient manner.
It’s still early in the day, but the market reaction has been negative in the short term (the stock is currently down about $15-17, or about 4-5%). Why? Here’s one asset manager talking to Bloomberg who makes a lot of sense:
The revised spending plan shows the heavy cost for Tesla to achieve its goals, said Dec Mullarkey, managing director at SLC Management. It’s “sobering up the assessment of free cash flow potential for the year.”
Some of that investment is in building out a semiconductor fab, which is a tough business with a long horizon for returns. Though, maybe, robotaxis has a longer horizon for returns? Or space data centers? Humanoid robots? If you’re in Tesla for the long haul, none of this really matters, which is probably the answer for why the company can trade so far above its earnings.
Rideshare Drivers Are Renting More EVs As Gas Prices Rise
The average gas price in the United States is up over $4.00 a gallon, and that number is starting to flirt with $6.00 depending on where you live. Suddenly selling your gas-powered car for an EV maybe doesn’t make economic sense, although if you’re replacing your car it’s something to consider.
There is one group of people who are especially price-sensitive and can be a lot more flexible with the cars they use: Rideshare drivers. Not every Uber or Lyft is owned by the driver, with many renting as Reuters reports:
At Hertz, which rents cars to Uber and Lyft drivers on a longer-term basis than traditional rentals, requests for EV reservations increased nearly 25 per cent in March compared with February.
The strongest uptick in demand for EV rentals has occurred on the West Coast, where gas prices tend to run highest, according to Ms Doria Holbrook, executive vice-president of Hertz’s mobility division.
At Turo, a peer-to-peer car-rental service similar to property-rental site Airbnb, EV bookings increased by 11 per cent in the last three weeks of March compared with the prior three-week period.
On March 31, the day US gas prices eclipsed US$4 (S$5.11) per gallon for the first time since 2022, EV bookings on Turo were 47 per cent higher than on the same day in 2025, the company said.
It’s not clear if that’ll impact the larger market, but it does show that there are some drivers who can react quickly to increased fuel prices.
‘In China For China And The World’
Chinese consumers have quietly been influencing car purchases outside of China for years. This meant that, for a while, automakers started building longer wheelbase sedans that would eventually wind up in Europe and North America. Then, non-Chinese automakers realized they were getting their butts kicked by local brands that understood the market better, so they hired Chinese engineers to build cars for China specifically.
You can probably see where this is going, and Automotive News spells it out quite well:
International automakers doing business in the world’s biggest auto market are shifting the local development and manufacturing strategy from “in China for China” to “in China for China and the world,” a trend in the spotlight at this week’s Beijing auto show.
The new approach leverages China’s advances in software-defined vehicles, automated driving, battery charging and other technologies in vehicles prepared for outside markets.
Legacy players from Ford and Mercedes-Benz to Nissan and JLR initially adopted local engineering and technologies to stay competitive in China. But they and others are quickly learning that what wins in China can also win worldwide.
My how the turns have tabled.
What I’m Listening To While Writing TMD
Ready for some mind-altering electronic music? Of course you are. Here’s Joseph Branciforte & Jozef Dumoulin with “ITERAE.” Full disclosure: Joe is a buddy.
The Big Question
Which automaker/brand should pair with Volkswagen to build a vehicle on the Scout platform?
Lead photo: Scout
I love the Scout, but I never really believe it would be real. It could definitely be a strong contender for my next vehicle, but I don’t hold out much hope for it actually coming to fruition.
I don’t care for Scout. VW has ample SUVs that they’ve thusfar refused to bring across the Atlantic.
I don’t feel like VW tries very hard to understand what they want to do well.
But, then, I’m biased as I don’t like the SUV-ication of the roads; it feels a perpetual race between armor and weapons. No one wins. Just put a 6MT back into the GTI/GolfR – and bring over the Golf R wagon.
Hmm – Rivian is the obvious choice, but regardless of a partner or not, assuming the E-REV design is solid, there needs to be a lower-cost, small to mid-sized main-stream CUV and sedan developed without the ‘adventure’ 4-wheel drive. Take the E-REV skateboard and come to market with an efficient single-motor vehicle that has at least 80- miles battery-only range to cover daily commutes + side trips, and an ICE/generator combo + gas tank to go a combined 500 miles. Make it MSRP under $40K ($35 is even better!) – and get out of the way.
The US market is missing the boat when it comes to E-REVs. Something for those who don’t have a 220 outlet waiting at home and/or don’t have access to a ICE vehicles for longer drives.
If one can find a common 120v outlet, E-REVs (and PHEVS) can easily get topped -off overnight without the added expense of dedicated 220 level-2 circuits. Depending on where you live, going pure EV is still not as convenient as going ICE on road trips, so an E-REV is the perfect vehicle for a single-car owner. Not everyone cares for a large pickup or off-road beast.
We need something like the Mazda 6E with its range-extender option for the US. Scout + someone could make that happen, maybe even VW itself.
Tesla investors are like crows, they like shiny things. That thing might be self driving, or crypto, or AI, or robots, you guys like robots! Right? Tesla seems disinterested in making cars and at times seems to treat the fact that they still have to make cars with contempt. They also seem stuck in a mode of trying to throw buzzwords at investors to decide what the direction of the company should actually be.
Still think it’s a long-term game of hot potato…
Any maker without a body-on-frame pickup or SUV platform in the US market. Those that come to mind are:
TBQ: Case-IH. Don’t even have to change anything, just sell Scouts at CIH dealers. Make sure a few are Farmall Red. Rural exposure achieved.
That song is not for me, as the last time my music sounded like that I had to replace the CD, but I am curious to know what “live editing” means. Thanks for sharing, always good to hear something new.
Will say for the third time. What if Scout were to partner with Rivian? There has to be some overlap there
Based off my experience trying to buy two cars at my local VW dealership, Scout ditching the dealership model is a great idea. The TLDR from my personal experience, unless you are buying something off the lot, they don’t want your business.
Scout should partner with Ram to resurrect the EREV Ram 1500. Scout supplies the batteries and powertrain. Ram designs a chassis (with help from Scout) that mates to their existing cab and bed options. VW quality meets Stellantis quality… What could possibly go wrong!
“Volkswagen Really Wants To Make Scout Happen”
I really wish they would replicate the original IH Scout and offer it as a base 2-door pickup model and make it configurable as a 2-door or 4-door SUV for people who want those.
On second thought, I’ll probably just end up getting a Slate. 🙂
I do not see a 2-door selling in any kind of meaningful quantities in the US unless there is a massive cost savings. Most people are going to require 4-5 seats and 4-5 doors.
Maybe I’m exposing a bias, but I see a lot of pickups in my area tasked with tradesperson work with only one occupant inside. I think there’s a sizeable market for pickups as tools with company logos on the doors and tailgate.
Maybe tradesperson sales are not enough to sustain a market. Maybe it is.
Who should partner with VW on the Scout? Navistar of course.
TBQ, I don’t know if the geometries match up at all, but what about Ineos? Bring an EREV version of the Grenadier and Quartermaster to market. Honestly, depending on the delays, I’m thinking about trading my Bronco for a Grenadier.
I think this is VWs last chance, and they should be dumping money into the Scout program to try and move the timeline up. The VW brand isn’t worth anything in the US, so why try to salvage it? Being early to the EREV game would be huge for them. I wonder why they can’t lean more on Rivian to share a platform. I understand a lot of engineering needs to happen to make the R1T into an EREV, but surely they could sacrifice the gear tunnel for a small ICE generator. I think the potential EREV market is huge because it has all the upsides of electric, but you can market it as a go-anywhere overlander.
Making an Audi version is a decent idea to placate VW dealers; I wonder if that will pan out.
The Scoput Name is theirs because of the international connection. I applaud the Scout 2 SUV throwback design, but I think they really miss the boat on the Electric/Hybrid drivetrain bottleneck. I do think there are some that are fine with either, but the crowd is still somewhat limited. I think the diesel experience of navistar should be proven through a revival of well designed, long lived fuel sipping diesel motors for a basic non electric Scout as well. VW makes the Amorak, put a spin on that with some blockier scout styling and maybe bring back the 2.5 – 5 cylinder without a turbo and that could be built in Illinois to avoid tariffs. I would take a dead reliable small truck like that.
A dead reliable truck like that already exists, it’s called Tacoma, Frontier, and (perhaps) Ranger, and Colorado. VW needs to carve out a nice niche, not jump into a market already dominated by Toyota. Who do you know who’s going to buy an Amorak over a Tacoma?
The Anorak is a rebadged Ranger and the current Tacoma is not dead reliable like the older ones.
TBQ. I think they should join forces with Slate which is another way to spell testla.
It figures that a guy named Mullarkey would make more sense than the CEO of the company of which he speaks.
Never noticed this. All this time I thought it was only Stellantis (STLA) that was hoping people would buy their stock by accident.
VW and Honda should buddy up. Honda could use a more butch EREV that doesn’t drink gas like a frat boy drinks Natural Ice while VW could use some tutelage on making reliable vehicles. Although Rivian may have a thing or two to say about that.
I know there are a lot of people waiting for a EREV that will the size and shape of the Scout. Offer it to everyone and see who would be in, Toyota, Nissan, Jeep, GM, Ford, Volvo, everyone.
I’m waiting for Tesla to go full Allbirds and just say they are completely pivoting to AI and Bitcoin
The completely forgettable shoe company pivoted to AI and crypto? Somehow, I don’t find that surprising.
This announcement would probably result in a single-day jump of infinity% for Tesla stock.
This whole delay with Scout is getting interesting. Who will be the first with an EREV pickup/large SUV? It’s between Ford, GM, RAM, Scout, and I think that’s about it. It sure seems like everyone is standing around waiting for someone else to take the dive to see what happens. I’m waiting for this as my next vehicle purchase.
VW just needs to place their Scout body on the Rivian skateboard for the EV. They’ll need to do something else with the EREV but Rivian seems like the obvious choice since they already have a working relationship.
Why does my car need to be software defined? F that BS!
They could use the R2 platform, and have something that is cheaper and higher volume, especially since the R2 is beating them to market. Both companies could get some economies of scale. There’s already a nice precedent of giving up and just using Rivian software, so they could just give up and use their EV platform as well.
A non-software defined R2, with the EV tech, but with all the extraneous electronics stripped out would be pretty cool.
The economics of renting a car to then press into service as a rideshare driver seem like something that couldn’t possibly work out well in the long run.
Faux taxi services in general are only something that works out well for the app platform owner in the long run.
I’ve thought the same thing. I’ve also seen people advertising their vehicles on Facebook Marketplace with a per/week rental price for Uber drivers. Which sounds like a terrible idea for everyone involved, both financially and in terms of liability.
That stressed me out just reading it. I’m sure the longer term rates are much more favorable than daily but STILL.
The same is true for areas that use 3rd party delivery services for Amazon.
I looked it up and the real-world rates are like $250-$300 per week. You’d have to gross a lot of money per week to make that worth it.
It would depend on the price. What if it were $600/month? That’s $20/day.
And it would require the unlimited mileage.