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• The Volkswagen Group’s revived Scout Motors intends to sell its EVs and EREVs directly to customers and not through dealerships, like Tesla or Rivian.
• This has drawn legal challenges from Volkswagen’s existing dealers.
• At IAA Munich, Scout CEO Scott Keogh dismissed their concerns and said the direct-sale model is best for EVs.

The Scout Terra cut an imposing figure onstage at IAA Munich next to its Volkswagen Group cousins. While the conglomerate’s other brands displayed two sports cars and a compact new electric city car for Europe, the Terra showed that American buyers like to be large and in charge.

There’s another way Scout Motors will operate differently from the rest of the VW Group when its cars go on sale in the United States in 2027: They’ll be sold directly to customers and not through franchised dealerships. At Europe’s biggest auto show, Scout CEO Scott Keogh reiterated that this Tesla-like model is the way to go, even as dealer groups escalate their legal challenges against the brand.

“If you look at 21st century brands and what they’re able to deliver, that’s what they do,” Keogh told reporters at the VW Group’s press conference earlier this week. “We can create the stores and we can create the brand experience,” he said, likening the buying process to getting a phone from Apple instead of Best Buy.

While Keogh said Scout doesn’t have any plans to launch in Europe “at this time,” he said the brand joined Audi, Porsche, Volkswagen and Skoda in showing off new wares “to tell our story to the global press.” The brand is building a new factory in South Carolina, and it will launch the Terra truck and Traveler SUV in both fully electric and range-extender versions—the latter packing a small gas engine that can recharge the battery and offer up to 500 miles of driving. 

The Scout brand is a potentially promising way for the VW Group to expand its EV sales in America and capitalize on the large SUV and truck market, where it’s never really been a player before. But that may hinge on its ability to prevail over car dealers’ lawsuits against its direct-sales model. Like Tesla, Rivian and Lucid, Scout needs to navigate a thicket of laws that compel car manufacturers to sell through dealerships rather than owned-and-operated storefronts. 

A group of Volkswagen and Audi dealers has filed a lawsuit in Florida, as has the California New Car Dealers Association, alleging Scout and the German conglomerate behind it have breached existing contract laws. In Munich, Keogh dismissed their concerns and said he was confident Scout would prevail.

“I’m quite clear on this front,” he said. “This is the right strategy. You have to do it right for the consumer, and America likes a business that can compete and challenge and innovate… it’s a lot of noise.”

Historically, car dealers in America have been accused of being unenthusiastic about selling EVs, failing to train dealer staff on how they work and even lobbying politicians to push back on rules that were once driving their growth. Many dealers are now anticipating a drastic slowdown in U.S. EV sales when the tax credits expire at the end of this month.

But long-term, Keogh—a former top executive at Volkswagen, Audi and Mercedes-Benz, and thus someone deeply familiar with the dealer system—said there’s more value in having a direct relationship with consumers. He also said that having direct access to trade-ins can be a source of profit for the brand as well. 

There is “intrinsic value in having the data, and owning the relationship to the customer,” Keogh said. “If you don’t own the relationship to the customer, what exactly do you have? You’ve got the factory and you’ve got all the costs. You don’t have all the optimization on that front.” 

Contact the author: patrick.george@insideevs.com