Volkswagen is partnering with an established severe-duty vehicle manufacturing specialist, to assist in bringing its Scout brand to market in Europe.
The German automotive giant has struggled in the North American market and recognises that large EV pick-ups and SUVs are lucrative—a point proven by both Tesla and Rivian.
With its Scout EV brand, which will focus on producing an EV pick-up and twin SUV, Volkswagen hopes to shape a demand scenario similar to what Rivian has enjoyed, but without the production cost issues.
Although the Volkswagen Group’s modular EV architecture, MEB, can accommodate large vehicles such as the ID. Buzz van, the Scout pick-up and SUV will become among the largest Volkswagens in production.
Launching a new sub-brand is always risky, even with the promise of generous EV incentives stimulating customer interest and demand. Volkswagen will be mindful of the production scaling and issues that Rivian has encountered with its RT1 and RT2 vehicles. To best avoid similar frustrations when bringing the Scout brand to Europe, Volkswagen has secured a loan to finance its joint-venture R&D project with Magna Steyr.
With its globally renowned R&D and production facilities in Graz, Austria, Magna Steyr has a proven history of off-road vehicle production and build quality. The Magna Steyr has produced vehicles for Porsche and perhaps its most iconic contract manufacturing role, is that of Mercedes-Benz’s legendary Geländewagen.
Possessing specific expertise in larger off-road vehicle production and quality control, thanks mostly to decades of Geländewagen production, Magna Steyr is a logical development partner for Volkswagen’s Scout project.
With battery costs commanding a significant proportion of the Volkswagen R&D budget, and a dedicated off-roader like the Scout models beyond the brand’s traditional product pipeline, the Magna Steyr deal isn’t an unusual outcome. When Mercedes-Benz wished to continue its Geländewagen, which was incompatible with the scale and supply chain of nearly all its other models, Magna Steyr’s contractor manufacturing was the solution.
For Volkswagen, which already has a joint-venture agreement with Ford to produce its Amarok pick-up in place, the cleverest solution for finalizing the Scout brand’s development and market deployment, is paying an entity with the requisite skills, like Magna Steyr.