The Re-Emergence of Scout Motors With President and CEO Scott Keogh

MotorTrend

MotorTrend's Ed Loh & Jonny Lieberman sit down with Scout Motors President & CEO

Transcript

00:00:00Welcome to The Inevitable, a podcast by Motortrend.

00:00:03Inspired by the future, designed for the now.

00:00:15Hi there, and welcome to another episode of The Inevitable.

00:00:19This is Motortrend's podcast, our podcast

00:00:21about the future of transportation,

00:00:24the future of the automobile, the future of electric SUVs

00:00:28with throwback nameplates.

00:00:30That's right.

00:00:31This week, we have the CEO of Scout, Scott Kehoe.

00:00:35What is a Scout?

00:00:37What is a Scout?

00:00:38You prefer to be some kind of expert.

00:00:40Yes, well, back after college, when

00:00:43I was living in San Francisco, my buddy Dylan

00:00:46had a whole bunch of Scouts, and we would just

00:00:48constantly rebuild them.

00:00:49And he even had, it was the coolest one.

00:00:51It wound up being named Grandpa.

00:00:52But it was a 1961 original Scout with the four-cylinder,

00:00:57which was just a 302 sliced in half.

00:01:00So it was a 151-cubic-inch four-cylinder

00:01:03on like an 8,000-pound truck.

00:01:05It's top speed, downhill, 59 miles an hour, maybe.

00:01:09Still haven't explained what a Scout is.

00:01:11Yeah, it's an SUV, little SUV.

00:01:13Everyone knows what a Scout is.

00:01:14A Scout, if you're not one of those people

00:01:17who knows what a Scout is, it looks kind of like a Bronco,

00:01:20like the old school, the original Bronco.

00:01:22But narrower, narrower, built by International.

00:01:25International Harvester.

00:01:26Yeah, the engines will go a million miles.

00:01:29Everything was so overbuilt.

00:01:30Square body, round headlights, super heavy duty.

00:01:33Yeah, it was like a semi-truck transmission almost.

00:01:36I mean, that was what I was going to say

00:01:37was before Ed sort of rudely cut me off,

00:01:39was we found a 68-frame engine and transmission.

00:01:43And so the 68 was actually a V8.

00:01:45And we did some pretty Sawzall-y surgery on the thing.

00:01:50And it then was very fast, and it became known as Grandpa.

00:01:54But I just remember the size of that transmission.

00:01:57I've never seen a passenger vehicle

00:01:58with a transmission that gnarly.

00:02:01It was just massive.

00:02:02Like the body, the steel of the tiny little body weighed.

00:02:06We had seven guys.

00:02:07We were trying to take it off.

00:02:08We had to go around a cherry picker,

00:02:09but we had seven guys trying to pick it up.

00:02:11Couldn't even budge it.

00:02:12Right.

00:02:12Just super overbuilt, cool little old school off-roaders,

00:02:15which are coming back as an electrified subgroup

00:02:19of the Volkswagen brand.

00:02:20Yes.

00:02:20So VW AG apparently bought the rights

00:02:24to start remanufacturing vehicles under the Scout name.

00:02:28This all happened quite recently.

00:02:31And the executive selected to lead this effort

00:02:35is a gentleman by the name of Scott Keough,

00:02:38who we have on the podcast today.

00:02:40And he's an old friend of ours.

00:02:41He's a longtime VW of America executive.

00:02:45He ran that brand for, I think, something like eight years.

00:02:48Audi.

00:02:49Worked at Audi.

00:02:50Worked at Mercedes-Benz.

00:02:53Oh, that's going way back, yeah.

00:02:54He actually has...

00:02:56He started off in marketing communications,

00:03:00essentially like a PR guy.

00:03:02And now is running, arguably,

00:03:04I would say one of the most interesting new brands

00:03:07in the automotive industry.

00:03:09Certainly a lot of questions around it

00:03:11and what VW Group is doing, as we'll get into,

00:03:14because they obviously have a whole family of brands

00:03:19internationally.

00:03:20And they've done a lot of different stuff.

00:03:22They have tried big SUVs.

00:03:24They've tried the Amarok pickup truck

00:03:26that was supposed to take out the Hilux globally.

00:03:29They just did a deal with Rivian

00:03:32for software, for electrified vehicles.

00:03:34So there's a lot of like, what's going on?

00:03:36Why do you need another brand

00:03:37if you already have all those brands?

00:03:41Why do you need a new brand?

00:03:42But we'll find out.

00:03:44We'll find out in our conversation with Scott Keough.

00:03:46And I think one of the things

00:03:47we are gonna talk a lot about,

00:03:49which we wanna just give you a heads up on,

00:03:51is E-Revs, which are electric range extended vehicles.

00:03:59Electric range extended vehicles.

00:04:00Yes, sorry.

00:04:01So long story short, what that means is

00:04:02there is a gas engine.

00:04:03It is never connected to the driven wheels.

00:04:06All it does is create energy that can go into the battery.

00:04:10And so it just extends the range of the EV itself.

00:04:12And what, like, you're like,

00:04:14oh, this sounds like a hybrid.

00:04:15It is a hybrid.

00:04:16It's a type of hybrid.

00:04:17It's a type of hybrid.

00:04:17But again, to Johnny's point,

00:04:19the fundamental characteristic,

00:04:20driving characteristic though,

00:04:21is that it's still an EV.

00:04:22So it drives like an EV.

00:04:23It accelerates like an EV.

00:04:25If you floor it, it will just go until it stops going.

00:04:29You'll never hear the motor kick on,

00:04:32like you will in some hybrids, to power the wheels.

00:04:35Yeah, if it's fully charged, the engine just stays off.

00:04:37Yeah, so-

00:04:38But not even fully charged, if it's just any charge.

00:04:41Once it gets below a certain threshold,

00:04:42the engine kicks on,

00:04:43and the engine probably just runs at steady state.

00:04:45It probably runs at like, I'm making this up

00:04:47because the car doesn't exist yet,

00:04:48but like 4,000 RPM,

00:04:50and that's just a good power band to generate electricity.

00:04:53And there's no other accessories on there.

00:04:55There's no heat pumps.

00:04:55No air conditioning.

00:04:56Yeah, nothing.

00:04:57Just, it literally, theoretically, powers the battery.

00:05:00And from a sort of packaging and platform perspective,

00:05:06you can generally think of hybrids

00:05:08as having a smaller battery, hybrid, plug-in hybrid,

00:05:13because they're more reliant on the gasoline powertrain.

00:05:16And then an E-Rev's gonna have a comparatively larger battery,

00:05:19but not as large as a full battery electric,

00:05:21but it'll have a large battery.

00:05:22But we don't, hang on real quick though,

00:05:23we don't actually know that with Scout.

00:05:26Yeah, yeah, yeah.

00:05:26I'm just talking about E-Revs in general.

00:05:28In general.

00:05:28So like, just talking in terms of like a lithium ion battery.

00:05:32So like a hybrid would have like a one kilowatt hour battery.

00:05:35A plug-in hybrid, you'd be talking like a 30 kilowatt hour battery.

00:05:39And then an E-Rev, you'd be like 60 or above.

00:05:41Generally speaking.

00:05:42And that'll give you like a couple of hundred miles

00:05:44of electric range with the E-Rev.

00:05:46And then, so Scout, what they've said is

00:05:48they're gonna have 350 miles of EV or with the E-Rev, 500 miles.

00:05:53So it gives you a little bit more range.

00:05:54And sorry, the setup is, when Scout was announced

00:05:58that it was coming back, the initial read was,

00:06:00it's gonna be battery electric.

00:06:03They might've said electrified,

00:06:04but everybody read that as Scout's coming back EV only.

00:06:08And then at their launch event,

00:06:10when they showed off their truck and their SUV,

00:06:13the wait one more thing or the surprise announcement was,

00:06:16oh, we're adding E-Revs.

00:06:18We're adding a range extender.

00:06:20Which to be honest, everybody in the industry

00:06:24seems to be doing.

00:06:25It started with Stellantis with the Ram charger.

00:06:30When they announced that, you know, Ram was late to the game

00:06:32with a full electric pickup truck.

00:06:34So they have the Ram charger coming.

00:06:38Sorry, they have the Ram Rev coming.

00:06:40That's the battery electric.

00:06:41And then the Ram charger is the E-Rev version of that.

00:06:45And that was kind of a big deal

00:06:46because for big trucks and SUVs,

00:06:49E-Revs theoretically handle a better,

00:06:54a lot of the common concerns about battery electric vehicles.

00:06:57Yeah, towing.

00:06:58Towing primarily.

00:06:59Also cold weather, you're just constantly generating electricity.

00:07:02And you can basically, you can, if you're towing with E-Rev,

00:07:06you don't have to, you can charge it,

00:07:08like pull up to a charger if you got it,

00:07:10or you can just go fill up at a gas station and keep going.

00:07:12So it seems to be a good half step or whatever.

00:07:17Yeah, and it'll be interesting to ask Scott

00:07:18because I've heard that like, you know,

00:07:2080% of the deposits of the Scouts are for the E-Rev version.

00:07:23So it'd be interesting if that's actually true.

00:07:26Yeah, so a lot to talk about with this guy

00:07:28because it's a cool brand to come back

00:07:30and also like solid designs.

00:07:32Like the designs were very, very newsy.

00:07:35A lot of people talked about them, including us,

00:07:37because they look great.

00:07:38Yeah.

00:07:39So without further ado, Scott Keough, head of Scout Motors.

00:07:44Hi, Scott.

00:07:45Johnny, how are you, man?

00:07:46I'm good.

00:07:47Thanks for coming.

00:07:47It's been a long time.

00:07:48Like good to see you guys.

00:07:49Yes.

00:07:50And let's just jump right in.

00:07:53Yeah, Scout.

00:07:54There's no other way, big time.

00:07:56Give us the pitch.

00:07:57What's going on with Scout?

00:07:58Why, how, like you are, as we said in the intro,

00:08:02you're a veteran of the automotive industry.

00:08:05You had a pretty sweet gig.

00:08:07I mean, yeah, your last title was-

00:08:09Lots of sweet gigs.

00:08:10Let's see, president of Volkswagen Group of America

00:08:13and North American region.

00:08:15That's a pretty big title.

00:08:16Yeah, that's a big one.

00:08:17This one's smaller.

00:08:18Why, yeah, why, why, why?

00:08:21Why jump and start a new car company, car brand?

00:08:24First of all, this is like the best job

00:08:25in the automobile business.

00:08:26Absolutely love it because you get to,

00:08:28one, restore an American icon,

00:08:31two, launch an all new car company,

00:08:33three, have the backing of parents and adults

00:08:35that know what they're doing.

00:08:37And so you have this clean sheet married to an icon,

00:08:40married to a trusted automotive company

00:08:43that can get things done and ramp up

00:08:44and get good material costs.

00:08:45The combination is perfect.

00:08:47The other reason I love it is I think the timing

00:08:49is exactly right.

00:08:50It's like, you always want to sort of meet the market

00:08:51and meet the moment.

00:08:52And the market is screaming for like,

00:08:54okay, let's build things again, America.

00:08:56Let's do things again.

00:08:57Let's start with a clean sheet.

00:08:58So I love it.

00:08:59I think it's perfect.

00:09:01And yeah, Scout's an iconic brand.

00:09:03I love bringing it back.

00:09:04Let's get into the timing.

00:09:06It's interesting, meet the market.

00:09:07So what about an electric sport utility vehicle

00:09:12and pickup truck is meeting the market?

00:09:14Yeah, I think a couple of things.

00:09:16First, if you look at it, I think one,

00:09:18I think there is a market for electrification

00:09:21to fight all of the, let's say, noise.

00:09:23And I'm sure we'll get into the noise that's out there.

00:09:25I think the technology is great.

00:09:26I think it's all sorts of opportunities there.

00:09:29I think just as important as you know,

00:09:30is we're launching with a range extender.

00:09:32And I think if you look at the reaction

00:09:34to the range extender, it's been a home run.

00:09:36Why is it a home run in my mind?

00:09:38I think it's doing two things really well.

00:09:40It gets a more traditional ICE crowd to drop their guard

00:09:45and say, it's got gas, cool.

00:09:47And they're in.

00:09:48And then actually what all the research is telling us

00:09:50is people who love EVs say, you know,

00:09:52it's not the worst thing in the world

00:09:53to have a backup generator.

00:09:54Just use that term for now, a gas generator on the vehicle.

00:09:57So it totally opens the market.

00:09:58So I think that's a home run move.

00:10:01And then I think, why now?

00:10:02I think building things in America,

00:10:04I think the factory in South Carolina,

00:10:06I think there's a lot of nostalgia

00:10:07to do things and bring things back.

00:10:09I think there's a lot of love for the Scout brand.

00:10:11You marry that with a range extender, electrification.

00:10:14The other reason not to go into super details,

00:10:16but I think what it does is it gives you a technology

00:10:19that now, whatever the market hands our way,

00:10:21over the next, let's say, 20, 30 years,

00:10:24from a manufacturing perspective

00:10:25and a platform perspective, we could do it.

00:10:28Let's say the market says 100% back in three years.

00:10:31On the factory line, super easy to execute.

00:10:33Platform's exactly the same.

00:10:34Let's say it's the converse of that.

00:10:36We're ready.

00:10:37So if you look at where the market's heading,

00:10:38I don't think electrification's going to zero.

00:10:40I think it's at 10 now,

00:10:41and I think it's going to go to 20 and 25.

00:10:43Then you add a range extender.

00:10:44I think it tools you into 50, 60% of the market easily.

00:10:49Perfect.

00:10:50And so that's what the reaction has been.

00:10:52As you guys know, we showed the car in Tennessee in October,

00:10:55and it continues to be the reaction.

00:10:56So that's why, my read.

00:10:58So that's great.

00:11:00But you guys, you announced Scout.

00:11:04You joined Scout at 2022.

00:11:06Yeah, September of 22.

00:11:08Exactly right.

00:11:08And at the time, what was the statement?

00:11:14All electric, battery electric?

00:11:15Or did you guys kind of waffle with electrification?

00:11:18Like when did E-Rev become part of the combination?

00:11:21E-Rev, I would say, one, it was always in our minds,

00:11:25let's put it back burner,

00:11:26because you have to think of at the time.

00:11:29And let's forget the consumer world.

00:11:31Let's focus on like what's America world.

00:11:34So ZEV mandates, which is basically the carb states,

00:11:37let's say it's 50% of the car market.

00:11:38Zero electric, zero emission vehicles, ZEV.

00:11:41Right.

00:11:41So yeah, zero emission vehicles.

00:11:43And still on the record is 100% by 2035.

00:11:48For 12 states.

00:11:50Yeah, but that's like 42% of the sales.

00:11:52So that's a big operation.

00:11:54Then you even go to federal EPA and that had the curve,

00:11:57as you guys know quite well,

00:11:58but that was taking you to like 60, 70% penetration by 2035.

00:12:02So certainly you had to get in the game

00:12:05or you weren't going to be in this market at all.

00:12:07So 100%, it did start with 100% battery electric vehicle.

00:12:11That's what we announced when September of 22,

00:12:13we announced our intentions.

00:12:16But I think we always had our eye on this possibility.

00:12:19When do we put it from the back burner to front burner?

00:12:21I would say nine months ago.

00:12:23But actually it speaks to working inside a small company.

00:12:27We have our engineering center in Novi,

00:12:29just outside of Detroit.

00:12:31We started spitballing the ideas.

00:12:33We have a early phase concept team,

00:12:36small group of engineers.

00:12:37They put some ideas on the table.

00:12:38Instantly they went to the market and they said,

00:12:40okay, here's the four to five ways we could apply it.

00:12:43Right.

00:12:44How do we fit that within our package?

00:12:46And then within two to three months,

00:12:48we had 80% of the concept down.

00:12:51And then now what we're doing is refining,

00:12:54refining, refining, right?

00:12:55Getting the cost, targeting down,

00:12:56making sure the package fits,

00:12:57make sure it can crash,

00:12:58make sure you can allocate all those kinds of things.

00:12:59So that to me speaks to the company.

00:13:02Try doing something like that inside a big giant machine

00:13:05that says, hey, we have our planning around.

00:13:07We have our fixed plan.

00:13:08We're not pivoting.

00:13:08We're not moving.

00:13:10So actually I think that's something to celebrate,

00:13:12not something like, oh, wait,

00:13:13you changed the plans a little bit?

00:13:15Yeah.

00:13:17What do you lose though?

00:13:18Because when you go from pure electric

00:13:21to having a range extender,

00:13:22you got to fit an engine.

00:13:24You got to fit a gas tank.

00:13:26You got to have exhaust piping suddenly.

00:13:29Significantly less, but yeah.

00:13:30Yeah.

00:13:31So without, I know you can't give specifics,

00:13:35but like what your pure EV looked like

00:13:39has to be different than anything

00:13:40that can take a range extender.

00:13:42So what do you lose?

00:13:42Let me break it into big categories.

00:13:46So big package elements,

00:13:49and I'll say things like great ability,

00:13:53ground clearance, interior, frunk, package,

00:13:57seating, all that type of stuff.

00:13:58You basically lose nothing,

00:14:00you know, because you look at

00:14:01how we're able to do the car.

00:14:03We're able to put the engine

00:14:04just off the rear axle.

00:14:06You have a smaller battery.

00:14:08So that chemistry gets smaller

00:14:09and the battery pack gets smaller.

00:14:11And then in that composite,

00:14:13former pack, the gas tank goes,

00:14:14but anyway, then we'll jump in.

00:14:16So have you announced

00:14:17how much smaller the battery

00:14:18is going to be yet?

00:14:19We haven't, but it's smaller.

00:14:21It's a smaller pack.

00:14:22So let's say the big,

00:14:24let's say Bev battery would be

00:14:26in the one twenties, one thirties,

00:14:28somewhere in there.

00:14:29And then this one would probably

00:14:30be in the sixties, seventies.

00:14:31Let's put it loosely like that.

00:14:33So let's say half-ish the size,

00:14:36the potential, so use different chemistry,

00:14:37but these are all things we're looking at.

00:14:40So big package, I would say you lose nothing.

00:14:44Then you come down to the pure performance,

00:14:47the pure performance,

00:14:48zero to 60 time of the battery

00:14:50will be quicker.

00:14:51Definitely.

00:14:52No debate.

00:14:53One would probably be,

00:14:54let's say zero to 63, five,

00:14:55maybe the other one would be 4.5,

00:14:57somewhere in there.

00:14:57So you're not talking,

00:14:59this is because like the voltage goes down.

00:15:01The chemistry would probably be chemistry

00:15:04that can handle, handle all that

00:15:06versus a less expensive chemistry

00:15:08on the would be on the other one.

00:15:09So it's long out because

00:15:10the other architecture elements

00:15:11are staying the same.

00:15:12We'll keep the same drive units

00:15:14for the most part in the thing.

00:15:15It'll be 800 volts.

00:15:16All of that would stay the same.

00:15:18So that's basically

00:15:19what you're going to lose.

00:15:20What you're going to gain,

00:15:21depending how you look at it,

00:15:22is the anticipated range of the BEV

00:15:25is 300 battery electric vehicle.

00:15:27That's 350 miles.

00:15:28The anticipated combined

00:15:31of the range extender is 500 miles.

00:15:33That's about approximately 150

00:15:35coming from the battery itself.

00:15:37And then the other 350

00:15:39coming from the tank

00:15:39working together to be 500.

00:15:40And again,

00:15:41these are all where we are in the concept,

00:15:43but they'll be in the zone of that.

00:15:45So that's what you lose.

00:15:46You lose a little bit of performance

00:15:49and then the range dynamics are different.

00:15:52If I look at things on the big picture,

00:15:54towing and payload and things like that,

00:15:56you're not losing that much.

00:15:57It's 2000 payload on both of them.

00:16:00Towing, there might be a little swing,

00:16:01but it's not massive.

00:16:02But then you get the advantage of

00:16:04towing with a range extender

00:16:05versus pure electric towing.

00:16:06Bingo.

00:16:07And that's one of the key things

00:16:08we wanted to do with the vehicle.

00:16:10Obviously you can drive it

00:16:12in whatever mode you want,

00:16:13but the big three we're focused on

00:16:14is let's say one,

00:16:16I want to drive this vehicle pure electric.

00:16:18There's a lot of people who want to do that.

00:16:20150 miles, you can do a lot pure electric.

00:16:22That's your day.

00:16:23Yeah.

00:16:23And then there's more hybrid mode,

00:16:25which is, let's say,

00:16:26let's opter, you know,

00:16:29optimize, sorry, I lose my language.

00:16:31Optimize this so you can get

00:16:33as much range as possible.

00:16:34And the other one is going to go heavier

00:16:36on the engine,

00:16:37max the engine up a little bit

00:16:38for towing and more heavier duty

00:16:40type of stuff.

00:16:41But we also want to make sure

00:16:42we keep this thing simple.

00:16:44But those would be the three big zones

00:16:45we want to cover really well

00:16:46because we think there's a market

00:16:47for all three of those

00:16:48and all three of those driving conditions.

00:16:50Can I go back?

00:16:51Did you break news here

00:16:54by saying disclosing

00:16:55the position of the engine

00:16:56or have you already mentioned

00:16:57that it's going to be in the back?

00:16:58We've mentioned that before.

00:16:59Okay.

00:17:00Yeah.

00:17:00So is that, that's interesting.

00:17:03I think it removes some piping for exhaust.

00:17:07But is there a cooling concern?

00:17:11You've hit the exact issue.

00:17:12We have a cool solution

00:17:13not to get into details, but exactly.

00:17:15You have to, you obviously

00:17:16at that last distance,

00:17:18you need to get some cooling in there.

00:17:20It's a tricky place to get it,

00:17:21but we've got a, yeah,

00:17:22we've got a good smart solution to do it

00:17:24and not to get into details.

00:17:25Formula one snorkel, I'm thinking.

00:17:28But so is the rear engine,

00:17:29is it, I mean,

00:17:30I'm just thinking on the pickup,

00:17:31like it's under the bed.

00:17:34Yeah.

00:17:34Okay.

00:17:35Yep.

00:17:35Okay.

00:17:36Where you might find, say,

00:17:37a full-size spare.

00:17:39Maybe.

00:17:40They tend to wind up in those locations.

00:17:43Okay.

00:17:44On both of them, actually, by the way.

00:17:47All right, but I want to make sure

00:17:48we get back to why Scout

00:17:49and the big picture stuff.

00:17:49You guys are, you're going down

00:17:51the rabbit hole of spare tires.

00:17:53You promised me.

00:17:53All right.

00:17:54All good.

00:17:54We got a whole thing on it.

00:17:55We got, I got a whole line of questions

00:17:56on eRev that we jump right into.

00:17:58You know, it's just, it's just.

00:17:59Stick to eRev, we're good,

00:18:00but I want to make sure we get back to.

00:18:01It's just fast because I've, okay,

00:18:02well, I've heard that, you know,

00:18:04people are putting orders down

00:18:05and I've heard it's been like

00:18:06overwhelmingly to maybe to Scout's

00:18:09surprise, or maybe not to eRevs

00:18:12have been what the deposits are for.

00:18:15Yeah, true.

00:18:15I think if you look at it.

00:18:18Directionally, what we're seeing

00:18:19is 70% for the traveler,

00:18:21which is the SUV and about 30% for the Terra,

00:18:23which is the pickup truck,

00:18:24about what we expected.

00:18:25And then I would say the majority

00:18:27is leaning towards, so over 50%,

00:18:29as well as say is leaning towards the,

00:18:31is leaning towards the harvester,

00:18:32the range extender.

00:18:33That's not surprising us particularly.

00:18:34I think what is great when you're looking

00:18:36at the demo, when the look at the states,

00:18:38the demographic of states and locations,

00:18:40it's telling us we got a 50 state car

00:18:42in our hands, as opposed to,

00:18:43you know, most electric vehicles,

00:18:45tend the preponderance of sales

00:18:46and become heavy from where we are

00:18:47here in California.

00:18:48And you see in places here,

00:18:49we're seeing it in Wisconsin's

00:18:51and Minnesota and the hearts.

00:18:52And I think that was always

00:18:54a critical thing for us, right?

00:18:55If you want to be a Scout

00:18:56and the type of vehicle that we're making,

00:18:57we want to make sure it was a 50 state car.

00:18:59And I think that's exactly

00:19:00what this technology is doing.

00:19:01But the more important thing

00:19:03on the technology, honestly,

00:19:05is it's dropped the guard

00:19:07of a big chunk of the market

00:19:08that says, I won't even talk about it.

00:19:10We can talk about electrification.

00:19:11You drop the guard.

00:19:12And then you start to talk about

00:19:13what this vehicle can do.

00:19:15And then the conversation

00:19:16is not electric range extender.

00:19:18It's like, what are its capabilities?

00:19:19And we start talking capabilities.

00:19:20And you're like, damn, this thing's cool.

00:19:23And the other thing which is smart

00:19:25is it's introduces electrification

00:19:28in a very cool way because you're going to,

00:19:31you know, the car will be driven

00:19:32off of the batteries.

00:19:33Both of the axles will be driven

00:19:34from the battery.

00:19:35The engine is being used

00:19:36as a generator, as a charger.

00:19:38And so I think you can introduce

00:19:40a quiet ride.

00:19:40You can introduce crazy torque.

00:19:42You can introduce charging at home

00:19:43and not going to a gas station,

00:19:44all these things.

00:19:45Yet, you don't have

00:19:46the insane panic attacks that says,

00:19:48OK, where's the charger?

00:19:49Where's everything that's going on?

00:19:50So there's, in my mind,

00:19:52a ton of benefits.

00:19:54And we've seen it firsthand.

00:19:56So that decision then,

00:19:58nine months ago to go E-Rove,

00:19:59did you go, first of all,

00:20:00you went from,

00:20:02SCAD's going to be all electric

00:20:03in the United States.

00:20:04And then you said, OK,

00:20:05it looks like,

00:20:07and this is something we've dealt

00:20:08with on this podcast,

00:20:08is like, we have to walk

00:20:10through this valley of hybridization.

00:20:13You, did you, is it fair to say

00:20:14you also evaluated, OK,

00:20:15well, I guess we could do a hybrid.

00:20:16I guess we do a plug-in hybrid.

00:20:18And then there's a thing called E-Rove

00:20:19that everyone's talking about.

00:20:20Did you, or did you guys

00:20:21jump straight to E-Rove?

00:20:23We had, let's, it was classic

00:20:25funnel work just that you laid out.

00:20:26So we looked at the funnel

00:20:27and we saw what was happening

00:20:28in the market.

00:20:29We saw the political dynamics.

00:20:30We saw the market dynamics.

00:20:32We saw the chemistry dynamic,

00:20:33a lot of dynamics.

00:20:34And you guys know them all

00:20:35as well as I do.

00:20:36We looked at different options.

00:20:37And then from those options,

00:20:40this was by far the best one.

00:20:41But, and the other thing

00:20:42that was critical to us,

00:20:43because if I take a look at the, like,

00:20:45what we wanted to achieve,

00:20:47number one, we wanted to make sure

00:20:49we kept the vehicle a scout.

00:20:51And by that we kept

00:20:52all of the great ability,

00:20:54all the ruggedness,

00:20:54all the off-road.

00:20:55So the thing's a scout,

00:20:56which regardless

00:20:58of what version you get.

00:20:58So it's not like it's

00:20:59a front wheel drive

00:21:00and it's out,

00:21:01whatever it's doing,

00:21:01it's like, no, it's a scout.

00:21:02The second thing we wanted

00:21:03to maintain the integrity

00:21:05of an electric vehicle,

00:21:06including the frunk,

00:21:07the packaging,

00:21:08all things you come to expect.

00:21:09And then the third one,

00:21:10which is great.

00:21:11We've got the solution

00:21:12that works to both sides

00:21:14on the equation,

00:21:15from an electric to a gas.

00:21:16So this by far

00:21:18was the best solution.

00:21:19And then the final piece of the puzzle

00:21:21is how well it works

00:21:22on the platform

00:21:24and in the factory level,

00:21:25because basically you're able

00:21:26to run it down the exact same line.

00:21:28You've got a jet operation

00:21:29for the tank,

00:21:30a jet operation for the engine.

00:21:33And so that allows you

00:21:35ultimate flexibility.

00:21:36What kills you, of course,

00:21:36if you have to change the plant, modify,

00:21:38or even worse,

00:21:39you have to say,

00:21:40all right, here's exactly our mix

00:21:41and exactly our penetrations.

00:21:43Here you have that fluidness.

00:21:45So I think that's the other solution

00:21:47why we loved it.

00:21:47And you're not messing with the frunk.

00:21:48You're not messing

00:21:49with a lot of things.

00:21:50You talked about cooling on and on.

00:21:52So I think it works well.

00:21:53It's a really good solution.

00:21:54Have you guys announced,

00:21:58I mean, I'm assuming

00:21:59it's going to be

00:21:59a Volkswagen Group product,

00:22:00but like what this engine is?

00:22:03We haven't.

00:22:04I think you two could probably

00:22:06put your finger on it

00:22:07if you did a fair amount of analysis.

00:22:09But I think, look,

00:22:09I think there's good high output,

00:22:12four cylinder, small engines

00:22:16that package well,

00:22:18that are industrialized in the region.

00:22:20So they're already localized

00:22:22or can be easily localized.

00:22:23And then, of course,

00:22:24you want one that can meet homologation, right?

00:22:26You still want a Sulev 20 engine.

00:22:28So you put all that together

00:22:29and you come up with a list

00:22:30and it's not, you know,

00:22:31there's not 4,000 engines

00:22:32that can achieve that task.

00:22:34I can probably guess this.

00:22:35So we love the fact of,

00:22:37I think that's one of

00:22:38the great advantages of one,

00:22:40we could pivot on a piece of paper

00:22:42very easily.

00:22:42We could make the platform,

00:22:43we can make everything work,

00:22:44but then you got to find the components.

00:22:46And then that's where

00:22:47the group is just fantastic

00:22:48because one thing to find an engine,

00:22:50another one homologated,

00:22:52industrialized, right?

00:22:53Because we want to get as much

00:22:54from the region considering tariffs

00:22:55and everything else that's going on.

00:22:57So yes, we do have it.

00:22:59And we have to tweak it

00:23:01because we want to optimize it 100%

00:23:03for the task.

00:23:04It's doing something different.

00:23:05Exactly.

00:23:05It's going to probably,

00:23:06I mean, again,

00:23:07I don't know that much about EREVs,

00:23:08but they tend to run at a steady state.

00:23:10Exactly.

00:23:11You can simplify a lot of things.

00:23:12Right.

00:23:12Turbos and everything else you don't need.

00:23:14You don't need air conditioning

00:23:16and blah, blah, blah, blah, blah.

00:23:17Do you expect the owners

00:23:20of the harvesters, the EREVs

00:23:23to be plugging the vehicles into charge?

00:23:28Here's one of the common narratives

00:23:29for automotive journalists,

00:23:30because we have access

00:23:31to limited OEM information.

00:23:35No, no, no, no.

00:23:37Well, that no-

00:23:38Here I am speaking my heart out

00:23:41at a table here in California

00:23:43and we get no information.

00:23:44No, no, no.

00:23:44That no plug-in hybrid,

00:23:46the manufacturers of plug-in hybrids,

00:23:48they don't have any data

00:23:49on how much the owners

00:23:50actually plug them in.

00:23:51Like, do you know,

00:23:52do you have any expectation

00:23:53that your owners are going to

00:23:55basically just fill them up with gas

00:23:57and have the motor generate electricity

00:23:59or that they're actually going to plug in

00:24:00their EREVs and charge at home

00:24:01or charge at location?

00:24:03Because they'll have that duality,

00:24:04they'll have that ability.

00:24:05Yeah, exactly.

00:24:05Look, I think it's certainly

00:24:08not an ideal-

00:24:09Let's use the example of reverse

00:24:10of what you're going to

00:24:12is basically, okay,

00:24:13we've got this small-ish engine

00:24:16dragging around a heavy,

00:24:18uncharged battery at day,

00:24:20carrying more weight,

00:24:21less efficiency,

00:24:22a significantly less than ideal situation.

00:24:24So I think, yeah, that's not the goal.

00:24:27I think that data,

00:24:28you got to believe

00:24:29with all of the upgradeability

00:24:31and updates are out there,

00:24:32I'm certain it out there,

00:24:33whether it's provided

00:24:34is a whole other story.

00:24:36What do we anticipate?

00:24:37I think we anticipate

00:24:39a big-time combination.

00:24:41But one thing to be clear,

00:24:43the car runs on the battery

00:24:46as opposed to the car

00:24:47runs on the engine, that front.

00:24:48Now, to your point,

00:24:49how do you get that battery charge?

00:24:50There's all sorts of ways of doing it, right?

00:24:51You could use the engine and the tank,

00:24:53the gas to go do it.

00:24:54You can also do with charging.

00:24:55I anticipate a fair amount of people

00:24:58who have a driveway

00:24:59and have a garage

00:25:00will be charging the vehicle at home,

00:25:03full stop.

00:25:04I think that's not the issue

00:25:05with electrification.

00:25:06I think the big issue with electrification

00:25:08is what you do

00:25:09when you're out there on the road

00:25:11and you do have these trips.

00:25:12Because we see most Americans focus on,

00:25:14they don't focus on the 95%

00:25:15when everything's fine.

00:25:17They focus on the 5%

00:25:18when things went to holy heck.

00:25:20And then, boom.

00:25:21Once a year,

00:25:22with your two weeks of time off

00:25:23you get from work,

00:25:24you have to visit the in-laws.

00:25:25And that's what you worry about.

00:25:26Even though, like you said,

00:25:2795% of the time,

00:25:28you do A to B, A to B, A to B.

00:25:30Or you're hearing from the press,

00:25:32by the way,

00:25:33all of the horror stories out there

00:25:35which says,

00:25:35ah, I drove by

00:25:36and there was five stations

00:25:38and two of the stations weren't working.

00:25:39The other two had 15 cars out of them.

00:25:41I'm one of the biggest-

00:25:42Away you go.

00:25:42I'm one of the biggest lab mouse about that.

00:25:44Yeah.

00:25:45And by the way, it's real as well.

00:25:47Yeah, it's just unbelievable.

00:25:49But I think what Ed was getting at

00:25:52is that we have this stereotype of like,

00:25:54just to pick on it,

00:25:55like the Wrangler, the 4xe,

00:26:00where it has,

00:26:01you know, it's like the original version

00:26:02was like 17 miles of electric range.

00:26:04Like why plug it in at the end of the day?

00:26:06And I think that that's,

00:26:08and that was maybe a bit of greenwashing,

00:26:11not to pick on them.

00:26:13Whereas this is a different proposition

00:26:14where if you're going to have,

00:26:15even if it's maybe 60 to 70 kilowatt hour battery,

00:26:18that's a lot to drag around empty

00:26:20to expect a small four-cylinder to charge.

00:26:23And it's 150 miles, not 17 miles.

00:26:26Yes.

00:26:26So this is intended to be authentic,

00:26:29credible electric driving.

00:26:32Yeah, without a doubt.

00:26:34And by the way,

00:26:35there's a lot of good things have come of that,

00:26:36like massive torque and performance.

00:26:38You guys know all the stories,

00:26:39so I'm quite riding it on and on.

00:26:41But it's a good question.

00:26:43How do we anticipate?

00:26:44But even going to the charging stations now,

00:26:49that's not where the heavy lifting is coming.

00:26:50Most of the heavy lifting is coming

00:26:52from home and the garage and things like that.

00:26:54So I think that's where we anticipate

00:26:55the battery side of it coming

00:26:56and then the gases speaks for itself.

00:26:59But again, I think what we're talking about here

00:27:03is putting is a philosophical or mental thing.

00:27:06It's not the way to go,

00:27:07but you've got to get over this hump.

00:27:10And I think this is a super smart technology

00:27:12that does that.

00:27:14Yeah.

00:27:15I mean, I run into this all the time.

00:27:16We're like, well, don't EVs just catch on fire.

00:27:19They don't work in the cold and all these things.

00:27:21Aren't they slow?

00:27:22It's like, no, no, no, no, no.

00:27:25You've mentioned a few times

00:27:26and we're always very curious about it.

00:27:28I think a lot of the questions

00:27:29that it's going to ask you

00:27:30that we got from internal motor people

00:27:32are going to be about this.

00:27:32But can you explain

00:27:35the relationship with Volkswagen?

00:27:37Because it's like not a Volkswagen brand,

00:27:38but it is a Volkswagen brand.

00:27:40You're autonomous, but you're not.

00:27:42It's like, we don't know.

00:27:44We've said it a hundred times.

00:27:46You guys like half listen.

00:27:47I think it's basically true.

00:27:50People say things where they're not always true.

00:27:53All right.

00:27:53So first and foremost, 100%.

00:27:55Scout Motors is part of the Volkswagen group.

00:28:00The Volkswagen group, as you know,

00:28:02as well as anyone holds a whole host of brands

00:28:04from Skoda to Bentley to Porsche to Audi and everything.

00:28:07Exactly.

00:28:07And we are one of those brands.

00:28:10Our reporting line is from here in the States.

00:28:13Scout Motors is an LLC

00:28:16and it reports into the Volkswagen group

00:28:18directly in Germany.

00:28:19So for me, for example, report into the board,

00:28:22we have board meetings there,

00:28:23we give them updates, away we go.

00:28:25They are the sole provider,

00:28:28funder of the company as of right now.

00:28:30But we've structured the company in a way,

00:28:33if we want to seek strategic partners with someone else,

00:28:36if we want to seek outside capital,

00:28:38if potentially we want to go public,

00:28:40the company has been structured to do that.

00:28:42So I think it gives us the runway

00:28:44and the ability to go do that.

00:28:46Like Porsche's relationship with the group

00:28:49where they have their own investment department.

00:28:53They bought whatever it was,

00:28:5650 some percent of Rimac and that whole thing.

00:28:58Right.

00:28:58And obviously they're that,

00:29:00but they're obviously way further along,

00:29:01way more expensive, of course.

00:29:02But they're sort of more,

00:29:04none of them, I don't even know how it works,

00:29:05but not more independent,

00:29:06but they do show a lot of independence within the group.

00:29:09Yeah.

00:29:10But I think where the confusion comes

00:29:12is people mix Volkswagen group with the Volkswagen brand.

00:29:15Yes.

00:29:16Volkswagen brand is a brand that sells great cars

00:29:18and does all the things that you guys know.

00:29:20We are one of the brands of the Volkswagen group.

00:29:22Yes.

00:29:23Full stop.

00:29:23They fund it.

00:29:24They strategically made the decision to investment.

00:29:26And the reason they did that,

00:29:28just go back to the beginning is,

00:29:29look where all this started

00:29:31is the group took a look at the world.

00:29:33And I think when they looked at the world,

00:29:35it's proving more true now than it did two and a half,

00:29:38three years ago,

00:29:38when they were starting to look at it.

00:29:40China, 20% market share for the group.

00:29:42Very, very competitive market.

00:29:44No story there.

00:29:45Europe, the group has 22-ish points of market share.

00:29:48Europe's flattening a bit.

00:29:49I think as you all know there,

00:29:50and then look,

00:29:51if you want to get a growth opportunity,

00:29:52the group has four points of share and change here

00:29:55between Porsche and between Volkswagen.

00:29:57So that said, what do we do?

00:29:59And of course, keep improving with those brands,

00:30:02keep investing in those brands,

00:30:03keep making them happen.

00:30:04But America is simple.

00:30:05The segments that scouts compete in

00:30:07is 40% of the profit pools.

00:30:09Those two vehicles where 40% of the profits are,

00:30:11it's 30 something percent of the volume.

00:30:14And overwhelmingly,

00:30:15it's dominated by a buy American mentality,

00:30:18American brands that do it.

00:30:19Nobody wants a full-size Volkswagen pickup truck.

00:30:22You can look at it, but this is –

00:30:24and so then, of course,

00:30:27looking at the acquisition of Navistar

00:30:29that came through the heavy truck business,

00:30:31Scout, of course, is there.

00:30:32And it was like, wow, let's do it.

00:30:34And the idea that was loved was,

00:30:35I think what you see with a lot of startups,

00:30:38I think there's a lot of excitement around it.

00:30:39People are like, that's cool.

00:30:40It's something new.

00:30:41It's cool.

00:30:42I don't know if I trust them.

00:30:44Then if you look at the classic OEMs,

00:30:46you're like, I trust them.

00:30:47They're a little bit boring.

00:30:49And so I think if you can have this startup

00:30:51that has all the energy,

00:30:52has the clean slate,

00:30:54has a super good debt and everything else,

00:30:57where you're not taking on brownfield sites,

00:30:59you're not taking on all these other obligations.

00:31:01Hasmat sites and all that.

00:31:02With the backing.

00:31:04And the other thing where it's critical

00:31:06is on material costs.

00:31:07So a good example,

00:31:08where startups struggle

00:31:10is you try and negotiate terms of trade

00:31:12for name the part,

00:31:14and it's brutal.

00:31:15Because they're going to say,

00:31:15ah, do we really believe your volumes?

00:31:17Do you really think you can get the costs?

00:31:19We come in with the power of the group.

00:31:20And as opposed to buying X thousands of seats,

00:31:23you're buying tens of millions of seats.

00:31:24It's like, okay, here we go.

00:31:26So it gives us beautiful competitive advantage,

00:31:29a clean slate,

00:31:29and an idea that's well-responded.

00:31:33Well, let me ask you something that'll follow,

00:31:36which is a bit of a challenge

00:31:37to this whole thing on EREVs.

00:31:39And I'll do one more EREV question.

00:31:40No, I'll go to EREV.

00:31:41That we can get off the topic of EREV.

00:31:42But all of that sounds great.

00:31:44The economy of the scale, I get.

00:31:47Scout being part of this massive VW operation

00:31:52where you can leverage that.

00:31:53But adding EREV back

00:31:56seems to be an unnecessary complication in that, right?

00:32:01Like the whole point of battery electric vehicles

00:32:03is that they are more efficient,

00:32:04and the parts complexity goes way down, right?

00:32:06You don't have to know valve spring,

00:32:08no pistons, no cams,

00:32:10no factories to build the pistons and cams,

00:32:11no need to test to do the emissions

00:32:13and do the certification and all that, right?

00:32:15Like, isn't the problem

00:32:19with the challenge of the startup

00:32:21is that, again, Tesla doesn't have to worry about any of that.

00:32:25Elon's famous for saying the best part is no part.

00:32:28And anytime you do a hybrid or a plug-in hybrid,

00:32:32as you've always mentioned,

00:32:33like you're getting hybrids in particular,

00:32:34you're getting kind of the worst of both worlds.

00:32:36And you're adding complexity.

00:32:38So where does that narrative...

00:32:42First of all, is that narrative true at all?

00:32:44Are you saying that there's a...

00:32:46I hear what you're saying,

00:32:47that you're going after primarily the American

00:32:49or North American market

00:32:51in the full-size pickup truck and large SUV.

00:32:54And we obviously have a huge appetite

00:32:57like nowhere else in the world for these kinds of vehicles.

00:33:00But is that enough to offset

00:33:01the additional complexity of adding a motor?

00:33:04The answer is 100%.

00:33:05Now, certainly I'm not going to naively sit here and say,

00:33:08yep, there's no more complexity

00:33:11to adding an engine, adding a gas tank.

00:33:13So of course, yes.

00:33:13The answer is yes.

00:33:15That was one of my initial questions was,

00:33:16what do you...

00:33:16How do we lose something?

00:33:18I'm not debating that.

00:33:18There's more complexity, of course.

00:33:20But of course, the flip side of that,

00:33:23did you open up a market?

00:33:25Did you bring more demand?

00:33:27Did you bring more volume into the equation from the...

00:33:29The answer is yes.

00:33:31Have you left yourself strategically

00:33:33open for the gateway of let's say,

00:33:35okay, the market does go 100% EV.

00:33:38It does go 100%.

00:33:38Yeah, you drop the E-Rift.

00:33:40Well, boom, you drop it and away you go.

00:33:41So I think we put ourselves in a strategic position.

00:33:44Yes.

00:33:45The flip side is we took on more complexity, 100%.

00:33:48The homologation, all the things you're talking about,

00:33:50which wouldn't have been on the table,

00:33:52parts, logistics, distribution,

00:33:53all those kinds of things that kick in without a doubt.

00:33:56But in my mind, you opened up the market by 40%.

00:34:00You put yourself in play in far more states

00:34:03and you gave yourself a much, much stronger ramp up.

00:34:07And what do I mean by to say that?

00:34:08You could either write it out and say,

00:34:10nope, we're going to stick to our guns.

00:34:12We're not going to change 100%,

00:34:14sit there and have a distinctly slower ramp up,

00:34:18waiting for the tide, waiting for amendment,

00:34:20everything else, or get right after it,

00:34:22put customers in on.

00:34:23So that decision, crystal clear to make.

00:34:26Did it have some compromise side of it

00:34:28in terms of more cost and more thing?

00:34:30Absolutely.

00:34:30Worth it?

00:34:31Totally.

00:34:31Let me ask you this.

00:34:32And then the other thing just that makes it work

00:34:35now just getting back to the material cost

00:34:38is if you can be smart with the chemistry,

00:34:42you can obviously with smaller battery,

00:34:44with less chemistry engine in,

00:34:45you can start to get the material cost

00:34:47to land in a good place.

00:34:49But I think also like Scout,

00:34:51because you're part of the group,

00:34:52it's sort of unique.

00:34:53It's not a big deal to source an engine.

00:34:55Whereas like if Rivian said,

00:34:57well, Rivian, Tesla, whatever,

00:35:00like they don't have engines.

00:35:01There's no engine part of that business.

00:35:04No, and we know the engines.

00:35:06We know how to integrate the engines.

00:35:08We know how to actually,

00:35:09we've homologated the engines.

00:35:10We know exactly what it means to have,

00:35:12let's say hybrid software on the engine.

00:35:15So that's all manageable.

00:35:17But yeah, definitely it adds complexity.

00:35:20But to me, it expanded the market big time.

00:35:23Let me ask you,

00:35:24this is hopefully not a question

00:35:26you're gonna punch me in the face for,

00:35:28but you're someone who is very uniquely qualified

00:35:34to answer this given your long history

00:35:35of working for German car companies.

00:35:38I have a thesis that says that companies

00:35:40like VW Group and Mercedes,

00:35:42and actually Toyota too for similar reasons,

00:35:46they don't wanna go full Bev

00:35:48because in the home countries,

00:35:50the auto industry is more than industry.

00:35:53It is a lifeblood.

00:35:54And walking away from the piston factory,

00:35:58again, the cam, the valve spring,

00:36:01and IG Mattel, the union,

00:36:04they cannot go the route of Tesla or Rivian or Lucid

00:36:06or any of these EV starts that are happening in China

00:36:08that are so simple

00:36:10because it puts so many people out of work.

00:36:12Is there any?

00:36:14I don't think that's the case.

00:36:17I mean, the overall goal is,

00:36:20to have profitable and successful companies

00:36:23and 100% employ the people and the plants

00:36:26and everything else.

00:36:27So I don't say that's being a reason.

00:36:28I think if you look at the brands,

00:36:30and again, you can speak to the executives

00:36:32from Porsche to Audi,

00:36:33there's been aggressive on the EV front,

00:36:36full stop, both in China, both in Europe and here.

00:36:38So I don't see that.

00:36:40And it certainly didn't drive our decision.

00:36:43That's certainly without that.

00:36:45What drove our decision is looking at the marketplace,

00:36:47looking at what's happening out there and says,

00:36:50is there a smarter way to go about this?

00:36:51And this is definitely the way.

00:36:53But that theory, I don't-

00:36:54You don't truck?

00:36:55By the way, I don't truck.

00:36:56Because I think, sorry, just to-

00:36:58No, no, no, please.

00:36:58Because I think the flip side of that,

00:37:00and let's look at PowerCo as an example,

00:37:02with their building battery plants,

00:37:05as you know, two of them in Europe,

00:37:06one of them in Canada.

00:37:07So those are massive employment,

00:37:10massive operations, things like this.

00:37:11So there's also a lot of things

00:37:12that come along with electrification,

00:37:14as you know well,

00:37:14and then big business in terms of the housing,

00:37:17big business in terms of that.

00:37:18So I don't see that.

00:37:20The transition is certainly challenging, full stop.

00:37:22Yeah.

00:37:23I was just going to say, because I like, you know-

00:37:25So I won't punch you in the face,

00:37:26but that theory, I'm not buying.

00:37:27Okay.

00:37:28Try and find one where he will punch you.

00:37:30Okay.

00:37:32No, just because like,

00:37:33I remember I read somewhere,

00:37:34like it was like, you know,

00:37:35in San Jose, California,

00:37:38it was like, you know,

00:37:38I forget, 96% of new car registration

00:37:41or some crazy number,

00:37:42maybe it was 46%,

00:37:43where huge was EVs,

00:37:45whereas like in,

00:37:46I can't remember if it was North Dakota or Oklahoma,

00:37:48but it was like 1%,

00:37:50you know, so it's like,

00:37:51how do you,

00:37:51if you're starting a new car company,

00:37:53that's EV only,

00:37:54you can't reach the North Dakotas

00:37:57if you only offer electrification.

00:37:59But I have this theory,

00:38:01and it goes like this.

00:38:02So, you know, Tesla and Lucid,

00:38:06they wanted to make a real fast EV.

00:38:08So they made the motor spin faster.

00:38:10With the Taycan,

00:38:11Porsche was like,

00:38:12add a transmission,

00:38:14two-speed transmission.

00:38:16Rivian, they said,

00:38:16we want to have like really good motor control

00:38:19off-road with our electric motors.

00:38:20So we'll program it.

00:38:21Mercedes with the electric G,

00:38:22they said, add transmissions.

00:38:24So now the G wagon has four transmissions.

00:38:27And I'm wondering,

00:38:29again, conspiracy theory,

00:38:30but like, you know,

00:38:31well, we're having a hard time

00:38:32rather than like,

00:38:33just spend the money on marketing,

00:38:35fine, just add an engine.

00:38:36This'll, you know,

00:38:37we know engines,

00:38:38we're German,

00:38:39even though you're American company,

00:38:40you know, that's just my little theory.

00:38:42I think it's pretty straightforward.

00:38:45Yeah.

00:38:46I think America said,

00:38:49electrification's cool.

00:38:50We're going along for this journey.

00:38:52It's not going as steep and as quick

00:38:54as either I planned or anticipated or whatever.

00:38:57So you've got to do something about it.

00:38:58Right.

00:38:58We've got dynamite electrification platform.

00:39:01It's got dynamite kit.

00:39:02It's going to do amazing.

00:39:03And it says,

00:39:04how do we build a smart bridge to get there?

00:39:06And this is a really smart bridge to get there.

00:39:08We keep the integrity of the car,

00:39:10keep the integrity of the platform.

00:39:11We keep the integrity of Scout

00:39:13and it moves it from being a San Jose,

00:39:16Venice car to into being a thing.

00:39:18And I think that's awesome.

00:39:20And by the way,

00:39:20I'm really simple on this.

00:39:23Look at the reaction that we got

00:39:25from the brand,

00:39:26from the vehicle

00:39:27and from the technology.

00:39:27And it's been huge.

00:39:28And even two jaded and cynical journalists

00:39:31can admit to that.

00:39:32This was,

00:39:32the reaction was huge.

00:39:34Exactly.

00:39:38Let me ask you about that.

00:39:40We're snarkies in between.

00:39:42In terms of the excitement

00:39:44and the reservations,

00:39:45which we talked about

00:39:46and the buzz,

00:39:49and you've confirmed it

00:39:50just a while ago here.

00:39:52We generally assumed a plugin hybrid

00:39:54should be priced between

00:39:56a hybrid and an EV.

00:39:58If the E-Rev has more range

00:40:00and more demand than the EV,

00:40:02does that mean it should be priced

00:40:04higher than the EV?

00:40:06Yeah, good question.

00:40:07And I'm not going to answer it.

00:40:10But it is a good question.

00:40:13Look, we haven't gotten down to mix

00:40:15and everything else.

00:40:16These are things that we are looking at.

00:40:18But theoretical economic principle,

00:40:21to your point,

00:40:22would say that which has more demand

00:40:25should drive the higher pricing.

00:40:26There is something I've read.

00:40:27There's something about that before,

00:40:28but let's see where we land

00:40:30on all that stuff.

00:40:31Look, let's be positive.

00:40:33We got an awesome platform

00:40:35that can move electric.

00:40:36We've got good pricing.

00:40:37We've got material costs.

00:40:38So you're not announcing that,

00:40:39but is it still coming in 2027?

00:40:45Is this the time frame?

00:40:46Yes, calendar year 27.

00:40:48Not talking model years at all,

00:40:49just calendar year.

00:40:51But have you said,

00:40:54two years, because we're in January.

00:40:55We've said late 27.

00:40:57Late 27.

00:40:58We've been clear on that.

00:40:59Now, just to be fair to everyone,

00:41:01because I know journalists

00:41:02are going to get a conspiracy theory.

00:41:03Yes, that's us.

00:41:04We're building a factory.

00:41:06You know, we're engineering a car.

00:41:08There's a lot of stuff to do.

00:41:09A lot of stuff to do, man.

00:41:11Building a factory, a lot of stuff to do.

00:41:13Consumer-based, of course, is coming,

00:41:14which is good.

00:41:15And here's a question.

00:41:16This is the one I have to duck.

00:41:17And Tizki, you might punch me in the face.

00:41:18No.

00:41:18The direct sales model, how's that going?

00:41:21I think it's going great.

00:41:23Yeah, I think it's going great.

00:41:24How do some dealers in California

00:41:26and other states, if I ask them?

00:41:28Yeah, look, I think two things

00:41:30that should be clear.

00:41:31There's been obviously lots of press

00:41:33and lots of everything else.

00:41:34There's no lawsuits.

00:41:36There's no lawsuits on the table.

00:41:38What's on the table is a lot

00:41:39of press articles with, you know,

00:41:41let's say threats and things like that.

00:41:43I think it's super clear.

00:41:44One, we have a brand in Scout

00:41:48that does not have a dealer network

00:41:51and did not have a dealer network.

00:41:52We have a brand in Scout

00:41:54that is 100% startup.

00:41:57And that allows you to make decisions

00:41:59that startups can make.

00:42:00We're making decisions with our IT platform.

00:42:03We're making decisions on the frame.

00:42:05We made a decision

00:42:06on where to put the factory.

00:42:07We looked at 74 different sites

00:42:09and we finally picked a fantastic site

00:42:12in Blythewood, South Carolina.

00:42:14And we're making a decision

00:42:15on how to sell the vehicles.

00:42:17And the decision we've made,

00:42:18is this anti-dealer?

00:42:20No, I've worked with dealers a long time

00:42:22and they do an amazing job

00:42:24and they sell 95%, 96%,

00:42:26whatever it is of the cars in America.

00:42:28It's a great job.

00:42:28But I do think about America

00:42:31and I do think it believes in innovation.

00:42:33I think it believes in competition.

00:42:35It believes in price and transparency,

00:42:37all the technologies that we have.

00:42:38And let's let the consumer decide.

00:42:42The best field you have in America

00:42:44is the consumer field

00:42:45and they make decisions

00:42:47based on what products they like,

00:42:48how they like to buy them

00:42:48and how they like to do it.

00:42:50So look, nothing is easy in life.

00:42:52But again,

00:42:54these are the decisions

00:42:55that we've made all along.

00:42:56And we made a decision

00:42:57on the platform, right?

00:42:58There was at the time,

00:42:59we could have said,

00:42:59okay, let's take a group platform.

00:43:01Let's carry it over.

00:43:02Let's see if we can make this,

00:43:03make a real Scout out of this thing.

00:43:04No, we went body on frame

00:43:06and all the decisions

00:43:07that come with that,

00:43:08solid rear axle, on and on.

00:43:09Why do we do that?

00:43:11Our number one thing is we said,

00:43:13the world is going to look at us

00:43:14and say these guys

00:43:14are going to put a sticker on some car

00:43:16and they're going to call it a Scout.

00:43:17This thing won't be credible.

00:43:18It won't be legit.

00:43:20And then we said, not happening.

00:43:21When it was first announced,

00:43:22we were like,

00:43:24what's the big Volkswagen?

00:43:25The Atlas.

00:43:25Revenge.

00:43:26They're going to do an Atlas.

00:43:27That's what we all said.

00:43:28How are they going to make an Atlas

00:43:29into a Scout?

00:43:30Big decision then.

00:43:31Then the other one was the factory.

00:43:32And then the third one

00:43:34is how we go about doing it.

00:43:36I don't have a who's better,

00:43:37who's worse, who's right, who's wrong.

00:43:39It's a business decision.

00:43:41And I think we can drive

00:43:44consumer love with going this way.

00:43:45And there's a lot that can be done

00:43:46with transparency and speed

00:43:47and technology.

00:43:48You guys know it.

00:43:50And that's what we want to do.

00:43:51OK.

00:43:51Yeah.

00:43:52So no, I'm definitely not

00:43:53punching you in the face on that one.

00:43:54OK.

00:43:55All right.

00:43:55Did you find one yet?

00:43:56All right.

00:43:57Well, let's...

00:43:57I think they're...

00:43:58All right.

00:43:59This is great.

00:43:59Because now we can go

00:44:01into the real softball stuff.

00:44:02But I will say,

00:44:03we interview a lot of CEOs.

00:44:04I like these decisive answers.

00:44:06OK.

00:44:06Yeah.

00:44:06This is refreshing.

00:44:07Hey, talk to the man at the top.

00:44:08No, I know.

00:44:09I'm saying...

00:44:10That's the only way in this job, man.

00:44:11Well, other CEOs disagree.

00:44:14So you have...

00:44:16Again, in your background,

00:44:17you've done...

00:44:18You've worn many hats,

00:44:19including marketer.

00:44:21So I want to talk some about

00:44:22some of this...

00:44:23Let's get into the nitty gritty

00:44:25about how this car is going to

00:44:27surprise and delight the end user.

00:44:29Our man, Eric Kingwall,

00:44:30our testing director,

00:44:31went to CES

00:44:32and he got a really good download.

00:44:33He got a preview of the Community UX,

00:44:36the user experience.

00:44:37He gave it high marks.

00:44:38This guy's been...

00:44:39We've been really focusing

00:44:40on software-defined vehicles

00:44:41and this and that.

00:44:42By the way, another good example

00:44:43of being a startup, right?

00:44:45We can go out

00:44:45and do those kind of things.

00:44:47You know, I think a very good example

00:44:49is what you see now

00:44:49is cars are coming out of the factory.

00:44:51It's like,

00:44:51who's the market for this thing?

00:44:53We were so hyper clear

00:44:54what we wanted to do,

00:44:55how we want to achieve.

00:44:56And then that's what designed the car.

00:44:57That's what set the platform.

00:44:58That's what set the UX.

00:44:59So it's good.

00:45:00But anyway, sorry,

00:45:01I don't want to interrupt.

00:45:02So I was going to offer you

00:45:03the chances to sort of summarize

00:45:05the Community UX approach

00:45:07and how it's...

00:45:08And I can...

00:45:08I'll just set you up and say,

00:45:10it's not all screen-based.

00:45:12It's a mix of screens

00:45:13and physical buttons and dials.

00:45:15How did you get there?

00:45:18This is a, what, a pivot back?

00:45:21Yeah, I think there's a few theories

00:45:23that I have and a few,

00:45:24yeah, a few conspiracy.

00:45:26I think the first thing,

00:45:27and it sounds completely hokey,

00:45:29but it's true.

00:45:30The line we started with

00:45:31going way back was

00:45:32we wanted to build this connection machine.

00:45:34That's like, wow,

00:45:34that sounds pretty hokey.

00:45:35But it's what led to the things

00:45:36we're fighting for.

00:45:37Like, let's get a bench seat.

00:45:39So my dog or my boyfriend

00:45:41or my girlfriend gets a bench seat.

00:45:43And then even the tailgate,

00:45:44we fought forever over the tailgate.

00:45:46And believe me,

00:45:46there's much easier ways

00:45:47to execute the tailgate than we did.

00:45:49But it's like,

00:45:50no, man, scouts got to have a tailgate.

00:45:52You got to drop that thing down.

00:45:53You got to, you know,

00:45:54drink a beer, go to a tailgate.

00:45:56What was the alternative?

00:45:58This is for the pickup or for the...

00:46:01I'm talking traveling now.

00:46:02I'm talking the SUV.

00:46:04I mean, you could have done it

00:46:07with a single hinge going across.

00:46:08It's easier to do it that way

00:46:09with particularly the spare tire in the back.

00:46:11And so our philosophy was

00:46:14America in general,

00:46:16social media and all this promise

00:46:18and everything else

00:46:18didn't lead to this holy land

00:46:20of great connection.

00:46:22Actually, it led to discombobulation

00:46:24and disconnection.

00:46:25If we look at a lot of cars,

00:46:27and I think what sort of happened,

00:46:29at least in my philosophy,

00:46:31boy, these cars of the future

00:46:32are going to be great.

00:46:34Screens, software, AI,

00:46:37they're going to be so great

00:46:38that we don't even want you involved with it.

00:46:40Just kind of sit there and behave yourself.

00:46:42Don't get the screens dirty, by the way.

00:46:44And don't do this and just kind of get there.

00:46:45Everything's going to handle itself.

00:46:47And even in the vehicles themselves,

00:46:48it was, we're going to add a screen,

00:46:49add a screen, add a screen to back

00:46:51and add a screen.

00:46:52So we don't want any of you connecting.

00:46:53Just deal with your screens

00:46:54and let's go navel around.

00:46:56And so totally,

00:46:58we went back to like old school scout stuff

00:47:00and it was like,

00:47:01you got to engage with the vehicle

00:47:03and build a connection machine.

00:47:04So once you set that as a premise,

00:47:06then you go to the UX and it's like,

00:47:07okay, Americans have not forgotten

00:47:10how to turn on a light switch

00:47:12or open a door handle.

00:47:14So like, let's put the switches back

00:47:16and be super linear with things

00:47:18because that the thing we use

00:47:19is let's make sure this thing is a tool

00:47:21and tools like hammers or screwdrivers

00:47:23or drills, you grab them.

00:47:25And if I never showed my son anything

00:47:27about a drill,

00:47:27you'd hand it to him and he would drill.

00:47:29And that's what we wanted to do.

00:47:30So that's what led to the switches.

00:47:32Super clean.

00:47:33You've got your,

00:47:34most of your lockers and all of that

00:47:36are up here.

00:47:37Your accessories,

00:47:38we'll talk about that in a second here.

00:47:39And then the classic switch,

00:47:40that was the first thing.

00:47:41And then once we got to the screen,

00:47:42we wanted to make it super simple,

00:47:44super iconic.

00:47:45The other thing, since it's a connection,

00:47:46is it's got a really neat thing

00:47:48where all three people

00:47:50can control the UX on the thing.

00:47:53So it's got cool little swipes.

00:47:54Let's say I'm doing the music on my side,

00:47:56but my wife wants it.

00:47:57Then you can swipe it over

00:47:58and she can do the music on that side.

00:47:59You have to see it.

00:48:00It's kind of cool.

00:48:01So that was the thinking.

00:48:03Connect, switches, simple,

00:48:06and let the community do it,

00:48:08which if you're in the passenger

00:48:09or the center bench or that,

00:48:10you could also be using that screen.

00:48:12And actually, I think it's,

00:48:13I'm glad he liked it

00:48:14because he was just sort of coming to life

00:48:17and we really came to life just for a CES

00:48:18and it got a good reaction.

00:48:19It's cool.

00:48:20Yeah.

00:48:20Well, I gotta go back and give you kudos

00:48:22for the bench seat.

00:48:23I'm sold.

00:48:26One of my many-

00:48:27By the way, in both of them too,

00:48:28pickup truck and the SUV.

00:48:29And is that, real quick,

00:48:30is that the only front seat option or-

00:48:33No, you can either go bench

00:48:34or you can go classic seats, yeah, buckets.

00:48:37And just for people who are listening,

00:48:39because that was a great answer

00:48:41and you covered a ton of ground

00:48:42on the decision-making process.

00:48:43What people need to understand is,

00:48:45first of all, I'm a huge Land Cruiser nerd.

00:48:48And Land Cruiser went away from the split tailgate

00:48:51and all the manufacturing executives will tell you,

00:48:54there's a reason why.

00:48:55It's more expensive.

00:48:56You've got to-

00:48:56100%.

00:48:58You've got to have a hinge on the top,

00:48:59a hinge on the bottom,

00:49:00and you've got to have a piece

00:49:01and you've got to have another piece.

00:49:02They've got to come together.

00:49:02There has to be a weather seal.

00:49:04It's got to have to be weatherized.

00:49:05Agreed, agreed, agreed.

00:49:06Water that goes in this way.

00:49:07But guess what people love?

00:49:09SUVs with tailgates.

00:49:10With a tailgate that you can sit on, right?

00:49:11It's the coolest.

00:49:12Yeah.

00:49:12And we had a ton of debate,

00:49:13where do you do the cut line with the lights?

00:49:15It went on endlessly.

00:49:17But there's also a handful of things

00:49:19you have to fight for in a car

00:49:21because those are the only things customers talk about.

00:49:23Another good one is the cabana roof.

00:49:25I'll show you guys.

00:49:25It's like a super large fabric kind of French roof.

00:49:28You know, it's like an old Deja Vu kind of Fiat kind of roof.

00:49:31Super cool though.

00:49:32It's big and it folds back and it's like, it's awesome.

00:49:34I was involved with a Scout that had that roof, a 61, yeah.

00:49:38Ah, cool, cool, cool, cool.

00:49:40But same for, the reason bench seats

00:49:43are not even offered anymore in the front

00:49:45is because the crash testing,

00:49:47the manufacturer, first of all,

00:49:49you know, a lot of manufacturers,

00:49:50they all use the same suppliers.

00:49:52If nobody's building it-

00:49:53Right, nobody builds it, yeah.

00:49:54You got to build it.

00:49:54You got to test it.

00:49:55You got to crash it.

00:49:56You got to make sure it works

00:49:58with all the different lovely sizes and shapes of Americans.

00:50:01Like, you know, it's very complicated.

00:50:04It's very expensive to offer this.

00:50:07So I'm curious.

00:50:09Let's get back to software though.

00:50:10But the only thing, just on that, you're exactly right.

00:50:12Everything you say is exactly true.

00:50:14But again, this is what's led to this sort of

00:50:18water downification, sorry, of the car business.

00:50:21And it's like, if you look at what Scout did well,

00:50:26they just built these cars that like,

00:50:28people care about, they're a lot of fun,

00:50:30and like, you're kind of stuck to your guns on things.

00:50:32And that's exactly this.

00:50:33And I want people to look at this car,

00:50:34and I do want people to look at it and be like,

00:50:35wow, these guys are a little crazy.

00:50:37They put a bench seat in this thing,

00:50:38put a tailgate in this car.

00:50:39This thing's kind of nuts.

00:50:40It's like, yeah, exactly.

00:50:41That's the kind of car we built.

00:50:42The thing's kind of nuts.

00:50:43But it's awesome.

00:50:45It's awesome.

00:50:45And that's the reaction we got.

00:50:47And I think people said,

00:50:48this is being made by people who love cars.

00:50:52And not only just love the physical cars,

00:50:54but what they mean to society,

00:50:55and what they mean to your neighbors,

00:50:56and what they mean on the road,

00:50:57and what it means when you talk about them.

00:50:59And I can guarantee you,

00:51:01that's the reaction we're getting to them.

00:51:02People are like, oh, you guys did that?

00:51:03You guys did that?

00:51:04Cool.

00:51:05And I sure we'll get into it,

00:51:06but we should talk a little bit about the Scout community.

00:51:08But I'm sure you guys will go there when you can.

00:51:10Yeah.

00:51:10But I want to just extend a little bit on the community UX.

00:51:15So one of our side hustles,

00:51:17along with covering EVs,

00:51:18is we've been really trying to cover software-defined vehicles.

00:51:23And I know part of the group is Carriad.

00:51:25And that group, those guys have had a lot of struggles,

00:51:29a lot of challenges.

00:51:30How did that impact Scout?

00:51:34You mentioned that, I think you might have landed the plane

00:51:36on community UX right before CES.

00:51:39Did it impact the development?

00:51:42Who did community UX?

00:51:43Is it through Carriad?

00:51:44Is it a division within Scout?

00:51:47So to be clear,

00:51:48the architecture that our vehicle will be using

00:51:52will be the joint venture architecture,

00:51:54which is fantastic, right?

00:51:55It's the Rivian.

00:51:56Exactly.

00:51:57So it's the 50-50 joint venture.

00:51:59Which is great architecture.

00:52:00Great architecture.

00:52:01And it gives us all the things we want for over-the-air updates.

00:52:03And power.

00:52:05Full shooting match.

00:52:06And then, of course, then the UX, 100%.

00:52:09We have a team in Northern California that designed it.

00:52:13And then that team will work directly

00:52:15with the joint venture team to implement it.

00:52:18It's a combination of design.

00:52:19It's a combination of our engineering.

00:52:21And then a combination of the joint venture.

00:52:23So, but it was all done by Scout.

00:52:25And this is where-

00:52:26The UX that you saw.

00:52:27Is confusing.

00:52:27But the other thing is that UX that you saw

00:52:29is basically all pre-programmed, sitting in the trunk.

00:52:33That needs to be translated now into the real car,

00:52:36into the real thing.

00:52:37And that's all what's happening as we speak, basically.

00:52:39I was just gonna say, what's confusing for a lot of people

00:52:41is they hear, yeah, we have the Rivian chips.

00:52:45And they just think, oh, you're just running Rivian software

00:52:48with a mask on it.

00:52:49But it's like, no, that's just like vehicle control.

00:52:51The screen, the community UX, that's Scout.

00:52:55That has nothing to do with Rivian.

00:52:57That's separate.

00:52:58Exactly.

00:52:58That has nothing to do with the group, it sounds like.

00:53:01And that, I think, is what a lot of people love about,

00:53:05and I say this as a Rivian owner,

00:53:06about Rivians and Teslas is that the software you see,

00:53:11as opposed to the software you don't see,

00:53:13the software you see is so good.

00:53:15Exactly.

00:53:16And it's just so much fun to own.

00:53:18Yeah, exactly.

00:53:18It's like your phone.

00:53:19It's like you're just getting new stuff with the updates.

00:53:22I agree.

00:53:22And it just works well.

00:53:23And one of the critical things about being direct to a consumer

00:53:25is you have to have the over-the-air updates.

00:53:28You have to have the ability.

00:53:29And by the way, it's exactly the thing,

00:53:31if you look at cars, and you guys already know this,

00:53:33it's not gonna be about all the metal

00:53:34that you've bent and turned around

00:53:36for model year improvements on and on.

00:53:38It's like software, software.

00:53:39The other thing, by the way, in the range extender,

00:53:41and I know you're gonna completely go off the charts on it,

00:53:44but the upgradability of this thing is endless.

00:53:50You have a gas tank, put a larger gas tank in,

00:53:53put a smaller gas tank in, add 100 miles, whatever it is.

00:53:56You have an engine, let's add, put more output onto the engine,

00:54:00which can then generate more range or generate more power.

00:54:03You have chemistry upgrades, all right?

00:54:04Let's use the newest chemistry, let's use this.

00:54:06So the permeations that you can do with this are phenomenal.

00:54:10And you can build full-blown different characters

00:54:12from the truck to the SUV and on and on.

00:54:14So in my mind, just to get back to the upgrades,

00:54:16that's where it's gonna be happening.

00:54:17It's gonna be happening there and in the software

00:54:18and everything else.

00:54:19Less on, yeah, we're gonna upgrade the design

00:54:22and things like that.

00:54:22I think we've got an iconic design

00:54:24that's gonna hold for a long time.

00:54:26I was just gonna say, with the Terra,

00:54:27you have a big platform to do physical upgrades

00:54:30to add a bigger gas tank.

00:54:32You're saying you're gonna be able to not just add-

00:54:34Just ideas, just ideas.

00:54:36But I get adding a physical, like a bigger gas tank,

00:54:40but are you saying you can OTA,

00:54:42you could over-the-air update performance to the motor?

00:54:46No, no, two separate things, two separate things.

00:54:48In terms of upgrading cars, software is one,

00:54:50and then you can do a lot with the register.

00:54:51But that's important.

00:54:51But there's no OTA, a bigger engine.

00:54:54Not that I, by when it comes, we'll talk about that.

00:54:56Maybe, like, you know, you could, you know,

00:54:59you would chip a car back in the day.

00:55:01You would overclock it, let's say.

00:55:03You could theoretically, maybe, I don't know.

00:55:05That's what I was asking.

00:55:06But no, it's interesting.

00:55:07I was just on the launch of the new 4Runner,

00:55:10and I was with the guys from Expedition Overland.

00:55:12And, you know, all they care about is range.

00:55:14That's their whole thing.

00:55:15And, you know, and they were talking,

00:55:16they're saying, we've been disappointed with the Tacoma

00:55:20because it's a great truck to outfit,

00:55:22except for it's got a usable 17 and a half gallon tank.

00:55:25And that for us, it really causes problems.

00:55:28And I'm just thinking of how big the Terra is.

00:55:29And I think that surprised me when I saw it,

00:55:31was the size of it.

00:55:33Yeah, it's a full-size truck.

00:55:36You being a scout could like,

00:55:38you could put a big tank in that thing.

00:55:39Yeah, that thing can, yeah.

00:55:40The Terra was a little tighter, but that one is...

00:55:41Yeah, you could put two tanks in there.

00:55:43Yeah, exactly.

00:55:44You could put tanks in the bed.

00:55:46Exactly.

00:55:47That's cool.

00:55:48Okay.

00:55:48The last thing I'm just...

00:55:51It was very exciting.

00:55:52And I want to talk more about Rivian

00:55:54and that relationship within the group.

00:55:56But that seemed to be,

00:55:59you're not using Carriot stuff at all?

00:56:01No, no.

00:56:02We're on the joint venture architecture.

00:56:04And then just as has been reported,

00:56:06as you guys have seen,

00:56:07Carriot is doing vehicles.

00:56:09They're doing a lot of what's called the E-cubed 1.1.

00:56:12So that's sitting in a lot of Volkswagens,

00:56:14sitting in Audis,

00:56:15it's sitting in a lot of Skodas.

00:56:16It's sitting on millions of vehicles.

00:56:17So I don't want to undermine that.

00:56:18And then the generation that's on

00:56:20the joint venture architecture will be a Scout,

00:56:23will be a certain Audi, a certain Porsche,

00:56:25which I won't mention.

00:56:26And then of course, the Rivian product.

00:56:27So they're sort of divided like that for now.

00:56:29And then let's see where it heads to.

00:56:31But we will be on the joint venture architecture,

00:56:33which for us is perfect.

00:56:35And I think it makes a lot of sense

00:56:37for the vehicle that we're offering,

00:56:38the time we're coming and everything else.

00:56:39Absolutely.

00:56:40Okay.

00:56:40So that's great.

00:56:42And what I think there's,

00:56:42you know, what people get confused on

00:56:44is the reason I keep using the term joint venture.

00:56:47There's Rivian,

00:56:47the hardware automotive company

00:56:50that we have no relationship to.

00:56:52And then there's their joint venture,

00:56:53which has a software.

00:56:54And that's where, of course,

00:56:55we're getting the architecture of our vehicle

00:56:57and doing all that stuff.

00:56:58Zonal architecture and...

00:56:59Exactly, exactly.

00:57:00And we had RJ in here to talk about it.

00:57:04Which opens the door.

00:57:05So now we've asked you to,

00:57:07you had your CEO hat on

00:57:08and then we made you put the nerd UX hat on.

00:57:11Now we're gonna ask you to put the marketing cloak,

00:57:12the cloak of marketing.

00:57:13I put a little bit on with connection machine,

00:57:14a little bit.

00:57:15Okay.

00:57:16Let's come back to,

00:57:17because Johnny is a fervent Rivian enthusiast.

00:57:21I'm an owner.

00:57:22I bought it because I thought it's really good.

00:57:25How do you,

00:57:26let me just ask you,

00:57:27how to differentiate Rivian from Scout?

00:57:30Between Rivian,

00:57:32I think it's hyper clear.

00:57:33And look, I don't think it's about,

00:57:34this is good and this is bad.

00:57:36I think first and foremost,

00:57:38just on the whole setup of the brand.

00:57:41If you look at it,

00:57:42they use this language right there,

00:57:44the Patagonia of whatever.

00:57:45Look, I think our brand is way more

00:57:47Levi's Carhartt than Patagonia.

00:57:49Filson, Filson.

00:57:50Do you know Filson?

00:57:51Yeah, I know Filson.

00:57:51Filson's a cool brand.

00:57:53This is hilarious.

00:57:54Filson's a cool brand.

00:57:55I actually had this question.

00:57:56I'm like, Rivian's Patagonia,

00:57:58Scout is,

00:57:59you just said Levi and Carhartt.

00:58:01Carhartt in there, yeah.

00:58:03This is a hipster Carhartt though.

00:58:04Come on, really?

00:58:05Because this is going to be,

00:58:05this is not Levi, Levi's.

00:58:07Levi's means something different in Nebraska.

00:58:09Levi's are sold in Walmart and Costco.

00:58:12We're not talking that level of entry point.

00:58:15Yeah, but I think-

00:58:16Filson, right?

00:58:16Yeah, but I think Levi's,

00:58:18if we're honest,

00:58:19they navigate everything,

00:58:20which I think is the magic of Levi's.

00:58:23You can wear them on a work site.

00:58:24You can wear them to Nobu up in Malibu

00:58:26and it's Levi's.

00:58:27No one's going to say,

00:58:28and that's why I think

00:58:30Scout works.

00:58:30Scout's going to be able to translate

00:58:33into 50 States in the communities.

00:58:34That's why I think it's going to work.

00:58:35It's going to be a coolest heck vehicle in Malibu.

00:58:38And by the way,

00:58:39you see $200,000 Resto Mod sitting there.

00:58:43You'll see Scout sitting there.

00:58:44It's going to work on a farm in Iowa

00:58:45and it's going to work.

00:58:46So that's what I think the magic is.

00:58:48The other thing is the products

00:58:50are inherently different.

00:58:52And everyone says,

00:58:53wow, they look alike.

00:58:53They look alike.

00:58:55No, they're not.

00:58:55Let's just go to the truck just for a five.

00:58:57We went full body on frame,

00:59:00solid rear axle,

00:59:01and much big separate bed,

00:59:03a size up in size of both of them.

00:59:05So we went just different philosophical vehicles.

00:59:08So I think the separation

00:59:10is going to make itself quite clear

00:59:11when you see them,

00:59:12when you interact with them,

00:59:12and then how the brand positions themselves.

00:59:14And again, not one is right or wrong,

00:59:17but I think we've got a clear space there.

00:59:19I think also where that space comes from

00:59:22is our heritage, right?

00:59:23We're not completely starting from one.

00:59:27Let's come up with some name

00:59:28and let's have someone create the name for us.

00:59:30And let's pay an agency to give us that name.

00:59:32And let's put the word together.

00:59:34And no, we have something.

00:59:35We have a heritage and we're playing to it.

00:59:37So I think we have that.

00:59:38And look, the balance we always use,

00:59:40I think if we do our jobs right,

00:59:42from a brand position,

00:59:43we've always used this heritage meets ingenuity.

00:59:47And I think if you look at American brands,

00:59:50ones that you love,

00:59:51they generally do that really well.

00:59:53And the two icons of heritage and ingenuity

00:59:55in my mind are Levi's and Apple, right?

00:59:57If you put them in that kind of place.

00:59:59And I think if you look at the Scout,

01:00:00it's got tons of heritage that we mentioned

01:00:02from using the switch gear to the bench seats,

01:00:05to the solidware axle,

01:00:06but then it's got mountains of ingenuity.

01:00:09How we execute the solidware axle,

01:00:11a thousand pound feet of torque coming off of that,

01:00:13the software, the zonal updates and all of that.

01:00:16So I think it's this perfect balance,

01:00:18which by the way,

01:00:18I think is exactly what Americans are looking for.

01:00:21And now you've got this blend of nostalgia

01:00:23and trustability and switch gears and cool,

01:00:26but we also don't want to go to America

01:00:28and say it's 1972.

01:00:29And let's forget the technology

01:00:32and everything that's happened.

01:00:33And that balance is what we're seeing.

01:00:35And that's why we're having a good reaction.

01:00:37So I think those two vehicles are,

01:00:38brands are quite distinct.

01:00:40Man, you're good.

01:00:42No, but it's true.

01:00:45No, I'm not saying it's not true.

01:00:47I'm saying you're good.

01:00:48Let me ask you this.

01:00:50You're launching two,

01:00:51and I know you're not going to get into that,

01:00:52but like, is the brand big enough

01:00:55to support other models?

01:00:56In other words, you're launching like a very large,

01:00:59and I keep saying this

01:01:00because it's the size of an F-150

01:01:01from what I can tell.

01:01:02Lane to F-150, almost to the...

01:01:03So that's big.

01:01:05No, Americans like that.

01:01:06That's great.

01:01:07And you're launching a pretty large SUV.

01:01:10Like, can you go smaller?

01:01:12In other words, like,

01:01:14we had RJ from Rivian on,

01:01:16and he said,

01:01:16the problem with the EV market

01:01:17is everything is a model Y clone.

01:01:19And, but, you know,

01:01:21they're, he's about to launch one.

01:01:22The R2 is that size.

01:01:24And then smaller,

01:01:25the Scout, can you go smaller?

01:01:27Also, you know,

01:01:27I remember very fondly the Travelall,

01:01:30you know, big, big SUV.

01:01:32Americans love big SUVs.

01:01:34You know, we're the suburban country.

01:01:36So you guys know a body on frame platform

01:01:39such as this,

01:01:40and I think you can look out of American products

01:01:44and you can probably figure out

01:01:45what our third product could quite easily be.

01:01:47There's a third one that fits right there.

01:01:49It would be off of the SUV.

01:01:50It may be able to hold a few more people.

01:01:54Easy.

01:01:54Right there in the thing.

01:01:55So that would be a third.

01:01:57And then the question on going smaller,

01:01:59it's, you know,

01:02:00can the brand hold it?

01:02:01Can the brand hold it?

01:02:02I think 100%.

01:02:04But the critical thing to look at is,

01:02:06honestly, we're not focused on that

01:02:08because the dangerous game you play there

01:02:11is, ah, maybe we're not succeeding here.

01:02:13Maybe we're not making money here.

01:02:14It's classic automotive game.

01:02:16It's like, well, let's go find the next thing.

01:02:18Right.

01:02:18The reason we picked this brand,

01:02:20the reason we picked this segment,

01:02:21this is where the money is.

01:02:22This is where the profit is.

01:02:23We have one platform,

01:02:24two hats on the platform.

01:02:26We kept up to the B pillar,

01:02:28super similar because that's what you want to do.

01:02:30That allows you to get that other side of complexity down

01:02:33and get this thing going.

01:02:34So this is where the action is.

01:02:35There's no lack of volume here.

01:02:37There's no lack of profit opportunity here.

01:02:39So I don't want to be one of these brands

01:02:40that's like, we need 18.

01:02:42We don't.

01:02:43I think we need a third one for sure.

01:02:45And then we can sort of take the dance from there.

01:02:47And you saw it firsthand at Audi.

01:02:49And Mercedes spoke about this a lot.

01:02:53It's like, we went two down market.

01:02:54We just did.

01:02:56With the A class and even like the A3s.

01:03:02You really need Audi price like a Kia.

01:03:05It's a stretch.

01:03:08Exactly.

01:03:08I agree.

01:03:09And look, with volume, of course, good things happen.

01:03:14But I think the automotive business got too focused on that.

01:03:16And by focus on just running for volume,

01:03:18you sort of lost your soul a little bit.

01:03:20And real quick, as you keep mentioning,

01:03:23profits are on premium vehicles.

01:03:26Yeah, OK.

01:03:26If you score and you have a real volume winner,

01:03:29you can make profits that way.

01:03:30But if you have a volume car that doesn't sell well,

01:03:33you're really-

01:03:34Then you get all a set of headaches.

01:03:35Yeah.

01:03:35Exactly.

01:03:36But you're right.

01:03:36I mean, look, you know some of the vehicles in these segments,

01:03:39they're doing $800,000, $1.2 million.

01:03:42They're doing some big volumes off the end.

01:03:44If you put the platforms together,

01:03:45which includes the brands and all of it,

01:03:47you get into 1.5s pretty quickly.

01:03:50And off a platform, that's-

01:03:52That's great.

01:03:52That's real math.

01:03:53That's great.

01:03:54We wanted to be crazy, crazy concentrated.

01:03:57We built the factory.

01:03:58The factory's capable of making 200,000 Scouts.

01:04:02If we really triple shift and push it,

01:04:04you can go a little bit higher.

01:04:05That's how we built our business case.

01:04:07That's how we built the returns.

01:04:08If it grows, it can grow.

01:04:10We can grow.

01:04:11But I don't want to be looking to the growth.

01:04:13I want to be looking to make this work and succeed now.

01:04:17And look, I think that's what happens when the Pilgrims came to America.

01:04:20It wasn't like, hey, you want to go to Asia?

01:04:22You want to go?

01:04:22So I was like, no, man, let's just get across this ocean,

01:04:25land there, and let's make this thing work.

01:04:27And that's exactly what we're doing.

01:04:30For the listener, I think you heard more than two things there.

01:04:33But I think the key message is they're not going to try to take this car to-

01:04:38take these vehicles, sorry, to Asia, to China.

01:04:41That's, I think, a lot of-

01:04:43like, my question was like, you guys are crazy.

01:04:45Like, why would you start with the truck and the SUV?

01:04:47But you've answered that very elegantly, very coherently.

01:04:50But I also want to make sure the listener knows you guys are nuts, right?

01:04:54Like, entering the full-size pickup truck market is-

01:04:59that is not a task to be taken lightly.

01:05:01Like, there are several major car companies that have tried and failed

01:05:06to enter the full-size pickup truck market and the big SUV market.

01:05:10And the battlefield is littered with these over time.

01:05:15Like, this is not like a new thing that people have tried.

01:05:17Because for a lot of the reasons you stated,

01:05:21Ford F-Series has been the number one selling pickup truck in America-

01:05:23number one selling vehicle in America for 47 plus years.

01:05:27Unless GM would actually combine GMC and Chevy sales.

01:05:30I mean, that was sold for 47 years.

01:05:32But this is-

01:05:33But I get where you're going with the question, so keep going.

01:05:35Yeah, that's the target that you've described.

01:05:37No, but I'm giving you the hats off for doing this.

01:05:41And the way you're doing it, which is to try to do this as an American brand,

01:05:45taking a revived American brand, do the manufacturing in America

01:05:50and build off of our- frankly, our love and addiction to giant-sized,

01:05:56four by four, very capable trucks and SUVs.

01:06:00I just- wow.

01:06:02Yes, I think the other is- look, exactly right.

01:06:05So no one's naive on the ambition, the magnitude of the task, the difficulty.

01:06:12You're aware Nissan exists.

01:06:13No debate.

01:06:13Yeah.

01:06:14You know about Nissan.

01:06:15And we're fully aware that it doesn't take a rocket science to say

01:06:19that's where the profit pool is in America.

01:06:20And it wouldn't be nice to make money in those profit pools.

01:06:22Yeah, totally good.

01:06:23A lot of people run those analogies.

01:06:24But look, I think we've made the right steps so far.

01:06:30And yeah, all those things that you mentioned are not inevitable.

01:06:34Giants get knocked down every day.

01:06:36How do you-

01:06:37Yeah.

01:06:38But the other thing I think is the philosophical thing of

01:06:41also look at these segments in general.

01:06:44I'm talking big picture.

01:06:46Americans are getting outdoors more like crazy.

01:06:50Every day, there's another Defender-esque, Toyota Land Cruiser-esque

01:06:54type of rugged-esque type of vehicle.

01:06:55The segments are booming.

01:06:57Americans are moving out of cities and moving into smaller places

01:07:00where these vehicles are- smaller cities, these vehicles are coming.

01:07:03So the mega trends in America for these types of vehicles are-

01:07:06and these types of brands are there.

01:07:08And the thing we didn't do, it's like, oh, here's just a model

01:07:11off of a brand that's doing a whole bunch of other things.

01:07:13It's like a whole brand dedicated to doing this.

01:07:16From the factory to how it's optimized, to the platform,

01:07:19to everything we're doing with the brand, to the retail, to-

01:07:21and so I think that's why this thing's-

01:07:23yeah, it's designed to win.

01:07:25But no one's naive to the challenge here.

01:07:27We didn't- that we didn't wake up to.

01:07:28That I promise you.

01:07:29And to underline the point about, you know,

01:07:31people are hungry for this.

01:07:32Like, you know, again, that four-runner.

01:07:34Nine trims.

01:07:35There's nine trims on a four-runner.

01:07:37Like, remember when there was one trim?

01:07:38On top of a- yeah, exactly.

01:07:40Exactly.

01:07:41Just look at the number of SUVs that Toyota has.

01:07:44Oh, you could-

01:07:44The number of SUVs-

01:07:45You have a Land Cruiser that's, you know-

01:07:47That's there.

01:07:48It's actually like, yeah, it's-

01:07:50And they're all good.

01:07:51They're all awesome doing their thing.

01:07:52Yeah, hey, nothing bad about it.

01:07:53I'm just saying, like, people are hungry, you know.

01:07:55So it does make a lot of sense.

01:07:58And again, as we said from the outset, like, you know,

01:08:01if you look at the U.S., it's so weird because you have,

01:08:03I don't know, what, full-size trucks are like three,

01:08:06four million vehicles a year, add it all up.

01:08:10And no one can crack it, right?

01:08:13I mean, it's this weird thing.

01:08:14It's a big three.

01:08:16Toyota, maybe a little bit, but a little bit.

01:08:19They're getting there.

01:08:20Tacoma is in smaller size for sure there.

01:08:22For sure there.

01:08:22Yeah, they've been there, you know.

01:08:24But like, it's just weird.

01:08:25Like, if you want to make money in America,

01:08:27you kind of got to do that, right?

01:08:29Yeah.

01:08:29And so, yeah.

01:08:31Okay.

01:08:31We are way over time, but I want to wrap up here

01:08:33with some bigger picture questions.

01:08:36So, Johnny, if you don't have anything, I'm going to...

01:08:37No, no, no.

01:08:37All right, let's go.

01:08:38Wait, this was a small ball interview?

01:08:40Yeah, anyways, I thought this was big.

01:08:42Yeah, it's full.

01:08:43Yes.

01:08:44Just a couple because it's topical.

01:08:48You know, when you start, when you were still at,

01:08:50before the announcement of Scout,

01:08:52you were leading Volkswagen in 2016

01:08:57when this guy Trump came into office, okay?

01:08:59And then you said four years, and then you took the job.

01:09:04And technically, I was at Audi in 2016.

01:09:06Yeah, I remember it very well.

01:09:08Yeah.

01:09:09But you're a different place.

01:09:10Yeah.

01:09:10And now you're here.

01:09:12And now this guy is in office.

01:09:14Has this changed anything for you

01:09:17and your approach to the business?

01:09:20Oh, the EV mandate's going away.

01:09:23Oh, there's going to be tariffs.

01:09:24Like, how do you see the world now?

01:09:25Yeah.

01:09:26Look, I think, you know, first and foremost,

01:09:29being at Audi in the last, as you remember,

01:09:31there was going to be a lot of Section 200 tariffs,

01:09:33anything coming from Europe, and it was a lot of...

01:09:36So look, you can't run a business on speculation

01:09:39and speculation and speculation.

01:09:41You can run a business on what's out there.

01:09:43But if I look at big picture,

01:09:44what is exactly happening in the world?

01:09:47Geopolitics, certainly happening.

01:09:49Let's say regionalization, certainly happening.

01:09:52And certainly the Trump administration is super clear.

01:09:56We want to make things again in America.

01:09:58We want to do things again in America.

01:09:59And if you're doing things in America,

01:10:01we're all in, we're all on board.

01:10:03We know this quite well from the administration

01:10:05in South Carolina.

01:10:06So to me, you almost couldn't design a better company

01:10:10for exactly what everyone's universally looking

01:10:13to do right now.

01:10:144,000 jobs in South Carolina,

01:10:17engineering a vehicle in Detroit,

01:10:1985% of the supply chain coming from the region,

01:10:23innovating and doing things in America

01:10:25like the range extender,

01:10:27like the software and everything else.

01:10:28So actually I think Scout is almost custom designed

01:10:32for this American moment and this American era.

01:10:34And by the way, I would say that would be true

01:10:37on the other side as well,

01:10:38whether it's Republicans or Democrats in,

01:10:40what politicians are going to say,

01:10:42wow, that's a terrible idea.

01:10:44You're building a factory in America,

01:10:46you're employing Americans.

01:10:47By the way, I don't want to go on my jobs kick,

01:10:50but if you look at the preponderance of jobs,

01:10:52they're here today, gone tomorrow jobs,

01:10:56next to no medical care benefits,

01:10:59next to no childcare.

01:11:01So these are going to be no joke,

01:11:0221st century jobs, right?

01:11:04You're being trained for something,

01:11:06you're being trained to have something in the future,

01:11:07you're going to be paid well.

01:11:08So I think what we're doing is spot on for America.

01:11:11And I know this is right,

01:11:12because I've traveled around to Fort Wayne,

01:11:15I've traveled to California,

01:11:16I've traveled to South Carolina,

01:11:17I've traveled all over America.

01:11:18And the instant you say,

01:11:19we're bringing back this iconic brand,

01:11:21every American says, that's cool.

01:11:23That's awesome.

01:11:24So then you get down to, you say,

01:11:26the policies and what comes of the money

01:11:29or what comes of the tax credits.

01:11:31Look, we didn't build it

01:11:33on the $7,500 consumer tax credit.

01:11:36Don't get me wrong.

01:11:36Would I like to have it?

01:11:37It would be fantastic.

01:11:39Sure.

01:11:39Is my entire company going to live and breathe off it?

01:11:42No, right?

01:11:42It was always going to be off the table in 2032.

01:11:44So whoever knew it wasn't going to be there.

01:11:46But to me, it's like getting an airplane off the ground.

01:11:49A little more runway would certainly be helpful.

01:11:53No debate.

01:11:54I think the other incentives, let's see what happens.

01:11:56But most of them are structured on industrialization,

01:12:00on the battery, right?

01:12:00You have them for the battery cell

01:12:02and then you have them for the battery pack.

01:12:04Let's see what comes of them.

01:12:05But I think those are doing

01:12:05what they're supposed to be doing,

01:12:06employing Americans to build things.

01:12:08So let's see what happens.

01:12:10But the core of what Scout is doing

01:12:13is evergreen in America, in my mind.

01:12:15No debate about that.

01:12:16No one's going to say, oh, bad idea,

01:12:18employing Americans, building a factory.

01:12:20Does Elon Musk's proximity to Trump

01:12:23or in the administration give you any kind of pause?

01:12:26How so?

01:12:28Runs Tesla, right?

01:12:29You might say like other EV companies are un-American.

01:12:34Something like that.

01:12:35No, it doesn't give me any pause,

01:12:37nor have I given it a ton of thought

01:12:38to give you the honest answer.

01:12:40Good answer.

01:12:41So that shows you which answers, exactly,

01:12:44reinforces what you said.

01:12:45That's it.

01:12:46That's all I got.

01:12:46It's all softball, apparently.

01:12:47Like I didn't ask any hard questions.

01:12:50My beautiful face is still all assembled.

01:12:52I apologize to the listeners.

01:12:54I didn't challenge Scott Keogh at all.

01:12:56Johnny, have you?

01:12:58No, I mean, good luck.

01:13:00I'm excited.

01:13:01I'd love to actually,

01:13:04I don't know if you'd be the person,

01:13:05but I'd love to like sit down

01:13:06and talk to someone about like all the off-road decisions.

01:13:09Because it's funny, like, you know,

01:13:11again, I own this Rivian,

01:13:12and I got a questionnaire from the company,

01:13:13like, why'd you buy it?

01:13:15And I just kept saying off-road ability,

01:13:17off-road ability, off-road ability is number one.

01:13:19If you're, next time you're in Detroit,

01:13:21in Nova, let me know.

01:13:22And we'd love to deep dive it, man.

01:13:24I want to put that person in that seat.

01:13:25Oh, easy.

01:13:26Yeah, yeah, yeah.

01:13:26Easy.

01:13:26We got like tons of them.

01:13:28Yeah.

01:13:28But I talked to people at Rivian.

01:13:31I said, what were the results?

01:13:33And they're like, you were number nine of nine.

01:13:36Nobody bought these for off-road ability.

01:13:38And I was like, but they're really good.

01:13:41So anyway, and I'm just,

01:13:42because I've been like,

01:13:43oh, you can put a winch on these scouts.

01:13:45Like, oh, like.

01:13:46Exactly right.

01:13:47Like lockers.

01:13:48And a plow.

01:13:49Yeah.

01:13:49And even a hail-based bike.

01:13:51We're even doing that.

01:13:52So we're doing like all the cruise service stuff.

01:13:55You could not, but yeah.

01:13:56You can do that on any of them.

01:13:57Yeah.

01:13:58But no, but it's just like, it's like,

01:13:59because, you know, on a Rivian,

01:14:00and again, they're very range sensitive.

01:14:03There's no winch,

01:14:03and there's nowhere to put a winch, you know.

01:14:05So it's like, oh, interesting.

01:14:07You could put a winch.

01:14:07Actually, another thing you didn't get into,

01:14:09but we'll get into is 100% day one,

01:14:12massive accessory portfolio.

01:14:13Most electric vehicles, like, ah, don't touch it.

01:14:15We have the thing perfect.

01:14:16All that's there.

01:14:17All that's there.

01:14:17Exactly.

01:14:18Yeah.

01:14:18That, which I'd love to have.

01:14:19Yeah.

01:14:20Yes.

01:14:20So yeah, I'll come back or someone will come back.

01:14:23Yeah.

01:14:23I'm going to hit this before.

01:14:25Inevitable.

01:14:26All right, cool.

01:14:27Scott Keogh's return is inevitable.

01:14:31Okay.

01:14:32Thank you so much for taking the time with us.

01:14:33Total pleasure, man.

01:14:35You know, we want to check in right when the thing starts,

01:14:39launch, if not earlier.

01:14:40Let's do it earlier.

01:14:40That's cool.

01:14:41Let's do this stuff.

01:14:41All right.

01:14:42Thanks.

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