VW-backed Scout Motors to build $2B factory in South Carolina

Scout Motors, the VW Group spinoff taking aim at the U.S. market with rugged all-electric vehicles, is deepening its investment with plans to build a $2 billion factory capable of producing 200,000 EVs a year in South Carolina.

There are a growing number of reasons for Scout Motors to keep the brand as red, white and blue as possible. And it’s not just to market itself to U.S. consumers. There are actual incentives on the line thanks to the Inflation Reduction Act and likely some kind of incentives package from South Carolina’s state government. The state government has not disclosed details on what incentives may be provided to Scout. However, South Carolina Gov. Henry McMaster has made it a priority to make the state an EV epicenter through an executive order signed in October 2022 that prioritizes building EV infrastructure, preparing the state workforce for advanced manufacturing jobs and organizing EV planning under a centralized state working group.

Scout Motors will build its factory in Blythewood about 20 miles north of Columbia, which will ultimately employ 4,000 people, on 1,600 acres right in the middle of the developing “battery belt.” The plant itself will occupy 1,100 acres of that property.

Groundbreaking is expected to occur in mid-2023, according to the company.

Scout revives a classic nameplate with funding and technology from VW Group. This factory, however, represents its independence from its parent company. From here, the EV brand will have to stand on its own four tires up against the Jeep Wrangler, Ford Bronco and Rivian R1S.

Scout Motors isn’t going the contract manufacturing route despite rumors that the brand was going to partner with a company like Magna Steyr or Foxconn. Scout CEO Scott Keogh told TechCrunch that after due diligence the company decided to bring manufacturing in-house.

“Look, being a startup, we did our jobs,” Keogh told TechCrunch in a recent interview, adding that the company evaluated every option, from taking a green-field approach and building a new factory to partnering with others and even taking over an existing factory.

“At the end of the day, where we landed is ‘manufacturing is a core expertise’,” he said. “We know how to do it quite well.”

Manufacturing in the United States was always a priority, Keogh said, but the 2022 Inflation Reduction Act provided that extra incentive (literally) to commit to the idea of building a factory.

“We think it’s important to manufacture in America, certainly without a doubt, the Inflation Reduction Act, combined with what the states are doing, make it a smart time to buy versus rent,” Keogh said.

Scout will receive support from the South Carolina government. The incentives package was not disclosed Friday. Keogh said the decision to locate in the state came down to many factors, including an existing infrastructure for the automotive industry and what Keogh called an “extremely strong port.”

The port of Charleston, which is about two hours from Columbia, is the eighth-largest in the United States and fastest growing, a strong incentive for an American brand with global roots and aspirations.

Keogh also praised the “beautiful bandwidth” of local talent at all levels thanks to local universities. “That’s going to allow us to build a future oriented company that’s loaded with engineering talent,” he said.

Notably, Scout will have a valuable neighbor and promising player in the EV space: Redwood Materials. The Nevada-based battery materials and recycling startup recently announced its own $3.5 billion plan to create a battery recycling facility in Berkeley County, South Carolina.

“I think what they are doing is brilliant and exactly right,” Keogh said when asked about this happy coincidence.

Though he declined to confirm any potential partnership between the two brands, battery recycling is very much on his mind, saying that in time he hopes for upwards of 50% of Scout’s battery supply to come from recycled materials. “Yes, we will be doing that. Do we have a deal structured right now? Absolutely not. But fully that is the plan,” he said.

For now, Scout Motors is focused on building its American-made, American-focused products by the end of 2026. An all-electric SUV will come first and a truck will follow a few months later. These vehicles will share VW components like motors and inverters but not whole platforms, meaning they’ll have to blaze their own trail to market.