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’m in the Puget Sound area for work this week, and if you just went by this area then Rivian is killing it. So there’s definitely a market for em, I just don’t think Scout is gonna be able to make a difference for VW based on their track record.
It’s only a matter of time before Rivian and Scout merge, rationalize their products and plants and become one viable company with two brands and four vehicles, two big trucks and SUVs and two mid-size trucks and SUVs wearing the Scout and Rivian badges, I can envision Audi knockoffs and possibly even VW branded versions.
I would say Jeep should partner with Scout. I get they’re going to be competing directly in a lot of ways, but Stellantis suuucks at just about everything related to EVs and technology so this might give them a jump start and they’d likely be more downmarket in their customer base and pricing so not as direct a competitor as it might seem.
Another one would be Hyundai/Kia. They’re doing a bunch of stuff on their own with EVs and offroad with the Crater concept, but it’s all just concepts. Scout would give them a jump start on the infrastructure and maybe speed up the time to bring a product to market while allowing them to learn and develop their own internal capabilities over time.
If VW wants Scout to succeed, then they should consider divesting from them and sell the brand to a competent company.
The only part that is questionable in the Scout plan, is the EV side. The hybrid version of their lineup will be a huge hit. There is absolutely no question in my mind about that. Obviously baring any massive quality issues or some big design failure that no one had picked up during development. As long as they aren’t dramatically over-priced, the hybrid Scouts will be a huge hit.
Scout: It is not surprising that the European employee and works council reps on VW’s board are opposed to Scout. They represent European union labor and the Scout will be built in the USA most likely by non-union labor. They oppose pretty much all manufacturing outside of western Europe.
Tesla: Why is a company will massive production overcapacity building 6 new factories? Was this explained in any way?
The Scout plant is in South Carolina so it’s definitely not union labor
We have a UAW factory in South Carolina. It isn’t impossible that the Scout plant will get unionized but it also isn’t likely.
Why not Rivian? VW already is using their software, why not partner with Rivian to give them an EREV? strengthen that relationship, and neither is a threat to the other outside the Scout.
I think helping Rivian develop EREVs would be very detrimental to the potential Scout market. Instead, partner with Rivian to get the RS2/RT2 and RS3/RSX3 to market faster as EV-only in exchange for using Rivian’s platform to get to an EREV Scout sooner. That way, there is less overlap in products between the two.
Scout could really use a defender. Where’s Boo Radley when you need him?
If I had a dime for every “To Kill a Mockingbird” reference here, I’d have about $0.20.
Okay, so maybe I’m a little hard of hearing so I wanted to check with the people.
What I heard from the VW CEO was ” We think this will fail, if we can sucker some other companies into covering a lot of the cost, when it fails, I won’t look so bad”.
As a consumer, that’s just what I want. Some cob job piece of shit that no one will take responsibility for and VW can just say “oh we don’t own scout anymore, sorry”.
Fuck that.
*GM Ultium has entered the chat*
“Which automaker/brand should pair with Volkswagen to build a vehicle on the Scout platform?”
Rivian. VAG already has a partnership and investment in the company for other stuff.
And Rivian already makes trucks that could easily be badge-engineered as ‘Scouts’.
RoboTaxis, AI, Optimus…
I see a future for RoboTaxis in general (mainly because they’re already all over the streets of my city) although I am concerned about rapidly falling opportunities for employment. I don’t understand the two door RoboTaxi.
Also nobody has an answer to the following question pertaining to the elimination of human drivers: Who is going to have the money to pay for a ride if all these human jobs are eliminated?
I can see a future in which the AI use becomes highly restricted. It will continue to be refined but will always make errors that need to be corrected. Corporations can’t help themselves when it comes to eliminating payroll and will begin to use AI to check AI’s work, possibly even using AI for final approval. Will a human engineer still be required to sign off? Cascading errors because of greed and sheer laziness will cause a tragedy.
What is the market for Optimus? The total number of Cybertruck buyers divided by 100.
Looks like they’re gonna ID Buzz the Scout. What a damn shame.
I hope they Scout the ID Buzz!
Tesla investors tend to think they are investing in Elon himself and all his ventures. I don’t really understand why but it’s amusing. They will start talking about something SpaceX is doing it maybe xai and you have to break it to them they are private companies. You own Tesla stock not Musk stock.
As far as scout partners, the whole idea seems to be separate and away from dealers as dealers appear to be an impediment for some if not most people. How they handle service when you have a dealer network you can’t trust and is unhappy with you I’m not sure other then to build something out or use a party that doesn’t claim to be wounded. On that front make an international version or a Porsche version. Audi and VW dealers causing issues and suing because they want a piece of a cake that’s not there while damaging your brands with greed. Don’t give in.
Porsche has done well with luxury SUVs. Cayenne could be turned into a decently capable off roader. So the market sort of already exists inside of porsche. Probably won’t hurt scout sales all that much might pick up some porshe people. It will probably be quick being electric drive. So it will fit in to Porsches portfolio well enough.
A BoF EREV G-Wagen off-road competitor would be really cool to see from Porsche.
It can be the next gen 597! With the spare tire in the front for crash protection. Just reverse polarity of the batteries or put the scout body on back to front.
The badge and name were one of the big reasons why the Lincoln Bronco concept will be iffy. Though while we’re at it, why not make it a Lambo, or a Bugatti.
My dad, who is staunchly opposed to the simple idea of EVs is interested in the Scout because of the looks and generator capability.
I think the only way Scout can be an instant hit is if it’s first to market. If Stellantis or any one has a BoF EREV for sale first, regardless of truck or SUV body, Scout is DoA. I think the first mover advantage will garner a ton of press for the first EREV 4×4. Everyone else will be also-rans.
I wonder if Rivian would even consider adding a generator to future products. Probably not. What other options does VW have for partners outside of their family of brands?
I bought my grandma’s 06 TL, recently. It’s a 3.2 NA V6 that “requires” premium. I think I’m going to switch to 87 and observe the MPG difference, then fill it with whatever has a lower cost per mile. Hard to justify the good stuff on a $4000 car.
I totally agree with your assessment about getting to market, and I think this site kind of alludes to that in the articles about the Hyundai Boulder and Kia EREV truck. Unfortunately, I think the Scout will struggle to get to market, and when it does, it won’t be competitive on price in the space. I think H-K are nimble enough and have the capacity to win this race with a package that is as compelling as it is affordable (for the space, that is).
https://www.theautopian.com/kia-puts-toyota-tacoma-on-notice-plans-to-sell-90000-hybrid-trucks-a-year/
I’d bet that VW will fumble the Scout launch much like they did the id.Buzz. If the Ram REV and the Wagoneer EREV come out later this year as planned, they’ll probably have all the bugs sorted out and be decently reliable by the time the Scout gets to market. Add Hyundai/Kia and potentially GM trucks into the mix and Scout might have a tough time getting market share.
Is H-K really that nimble? Those plans you linked explicitly aren’t for another 4 years to market. Or look at how long it took for them to get the Santa Cruz actually in production, the package wasn’t that compelling or affordable compared to its competitor, and they didn’t pivot it to something that was (by adding a hybrid drivetrain) so it got the axe.
My mom drove Acura TL’s for probably 300k miles between two of them (a 99 and then ’04). Both “required” premium and aside from one “trial” tank of premium (which produced zero noticeable difference in power or fuel economy), were filled up with 87 exclusively. The 99 ended up getting totaled and the transmission mechanically totaled the ’04 (that era Honda 5spd autos were problematic). Neither ever had any engine issues.
The exact same engine was used in Honda-branded cars and did not say to use premium. Perhaps Acura’s got a slightly warmer tune or something, but I wouldn’t piss away an extra $10-15 on every fill up for potentially an extra 5hp or something you’d never remotely notice.
I wish my Dodge was as tolerant to octane changes. It requires midgrade so it’s only a 50 cent increase per gallon but my mpg drops from 21~ to 16~ and the engine runs poorly. Stumbles on startup, misfires sometimes, slightly slower acceleration.