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00:00One year ago, Scout Motors announced its return with parent company Volkswagen, naming Scott Keogh as CEO.
00:06Since then, the company has pivoted from plans to produce only battery electric vehicles,
00:12adding a gas motor hybrid to the lineup, which now dominates pre-orders.
00:17Today, Scott comes back to open interest to give us an update
00:20after announcing an additional $300 million investment in his $2 billion South Carolina plant.
00:27Scott, great to have you on the program.
00:30I have to say, we told our automotive team on the BN side that we were having you on,
00:35and we were flooded with questions.
00:36Everybody wants to know about Scout, from Keith Naughton to Craig Trudell to Monica Raymond.
00:42The list goes on and on.
00:44I especially am interested, as you know, I put in a reservation,
00:48and I actually reserved the full BEV version, which is, I know, unusual since I'm normally a V8 guy.
00:55But are you still going to be making that one at first, or will you go just with the hybrids at first because you've had so many more orders for those?
01:05Look, Matt, that's a fair question.
01:07And we're developing both of them, as you know, and we're developing them parallel.
01:11Look, the market has spoken.
01:12Over 80% of the reservations are the range extender.
01:15In general, in life, you like to meet the market.
01:18So certainly we would probably lean with the E-Rev, but nothing we've announced yet, Matt.
01:22Both of them are being developed.
01:24Both of them can be handled at the manufacturing line, as you know, down in Blythewood.
01:28We'll announce that as soon as possible.
01:30I know I have to tell you first, since you're a reservation holder.
01:33I'm waiting.
01:34I mean, there are a lot of reservation holders.
01:37How many of us are there so far?
01:38There's over 130,000 the last time I checked and growing each and every day.
01:45So it's really exciting.
01:47The demand for the car is phenomenal.
01:49It's one of the best responded to products I've seen in my 30 years in the automotive business here in America.
01:55So we're obviously excited.
01:56I wonder about the production facility.
01:59I'm really psyched to go down there and check it out when I get the invite in Blythewood.
02:05I guess you can make up to $200,000 a year.
02:08Are you going to be running it at full tilt?
02:10Or what's the idea in terms of capacity utilization?
02:14Look, you know the dream, Matt.
02:15The dream is full utilization.
02:17And full utilization is, you know, three shifts, 24 hours a day, seven days a week.
02:22That's the dream.
02:23But look, we want to get there.
02:25And we want to make sure we can ramp up with maturity.
02:28So we think it'll take at least three-ish years to get to that full output.
02:32Because we want to make sure the product is right, the quality is right, everything is dialed in,
02:36the employees are properly trained.
02:37But that's the dream.
02:39Full utilization is exactly how you get maximum profitability.
02:43And that's what we want to work towards.
02:44And we feel confident we can get there.
02:46It's a lot of building you're having to do, Scott, because it's not just the factories.
02:50It's the fact that you're going direct to consumer, which takes a lot of support.
02:55It takes a lot of service and some real investment in that.
02:58Why choose that path?
02:59What do you see as the success is going direct to consumer?
03:02Look, Danny, you asked a big question.
03:06And I think you're exactly right.
03:08We took the harder path on a lot of things.
03:10We took the harder path on the factory.
03:12We want to build and do it ourselves.
03:14We took the harder path in putting the supplier park right there in the plant just yet.
03:19This is also where we'll do all of the accessories.
03:22And finally, on the direct to consumer, look, I don't disagree with the dealer model, but there is a better path.
03:30And that's exactly why we want to do it.
03:32And what you get is what consumers want.
03:35Consumers want pricing transparency.
03:37Consumers want simplicity.
03:38And look, things like the Internet and things like Amazon have taught us very clearly.
03:44Customer data is important.
03:45Customer service is important.
03:47And we're the company that engineered the car.
03:49We're the company that manufactured the car.
03:51And we're the company that's going to look after the customer throughout the value chain.
03:55So, yes, it is harder, but it's the right thing.
03:58And the final point, if you look at 21st century companies, there's no universe where you would carry all of the manufacturing and the expense, but not also carry the cash register, if you will.
04:12And all 21st centuries have that relationship with the customer.
04:15They have the data control of the customer.
04:17And if you look at artificial intelligence, it's going to demand that you have the full value chain and not hand it off.
04:23So it's a critical strategic decision and one we're implementing as we speak, as you know, Danny.
04:28But it's definitely the harder route, but it's the right thing for our customers.
04:31It's the right thing for America.
04:33Scott, you talking about simplicity reminds me when Matt and I went down last month to check out one of your cars.
04:39And you've really designed it to make sure that it is tactile, that it's not all screens.
04:45Do you think a lot of this industry, of this auto industry, has gone too far that they've made cars, in the words of the president of the United States, where everything's computer?
04:55I won't say computered, but 100%.
05:01We feel it.
05:02We know it.
05:03We see it in all the research.
05:04And you see it in every day.
05:06And we see the response to Scout.
05:08Look, simplistically, we've been trying to build something we call a connection machine.
05:12And we think vehicles have become sort of dystopian disconnection machines.
05:18Everything's eight layers down.
05:19Everything's on a computer screen.
05:21Everyone in the car needs their own computer screen.
05:24And we think the exact opposite.
05:26We think mechanical switches give you a connection.
05:28We think less screens is better.
05:30We think bench seats are cool.
05:32We think tailgates are cool.
05:33We want to build this real, authentic connection.
05:36And look, I think some things don't need to be reinvented.
05:40There's no American that said, I don't know how to open a door handle.
05:44There's no American that said, I don't know how to turn the fan speed switch.
05:47And let's bring those things back, and let's get down to basics.
05:51It also plays back to our heritage.
05:53That's what Scout was all about.
05:54Things were linear, straight, direct.
05:57And so, yes, I think that will be the trend.
06:00I think there's going to be a walking away from computering or computered everything, full stop.
06:06Hey, first of all, I'm a huge fan of the tailgate.
06:09That was one of the coolest pieces that I didn't expect.
06:11I ordered the full, or I reserved the full Bev, just because it's faster and it's lighter.
06:17And I feel like the battery tech is there to the point where I'm happy to experience that for the first time for me.
06:23A lot of other people, though, are going to only want a gas motor.
06:28Is there any possibility that you put out not just a hybrid, but a full ICE Scout in the future?
06:34You know, I don't see it.
06:37And I look, there's a lot of drama now that says the world was all EV.
06:42Now the world's going to become 100% internal combustion engine, as that is that.
06:47Look, we know there's a lot of whipsaws in the industry, which is why I always look for what is cool technology, what is an American looking for?
06:56And in my point of view, the best consumer proposition is exactly what we are putting forward.
07:01If you look at the four big pictures of what this drivetrain can deliver, to me, it's all American.
07:07So first of all, is there enough power?
07:10Over 600 horsepower, 1,000 pound-feet of torque, lots of power, 0 to 60 in 4.5 seconds.
07:17Does it have range?
07:18500 miles of range.
07:20Does it have generator?
07:22So can you use a gas chain or an electric generator?
07:25And by the way, is it efficient?
07:27And you're going to be talking about EMPG of 70-plus miles per gallon.
07:31So this, to me, is a super machine.
07:33And I think Americans are going to say, this is awesome tech.
07:37I can have my EV coolness, but I can have my ICE range.
07:40So we think it's the right way.
07:42And by the way, Matt, the other reason we love it is, from an engineering point of view, it keeps the platform structure the same.
07:49It keeps the engineering at the plant the same.
07:51It keeps the manufacturing lines the same.
07:53So it allows us to be super efficient.
07:55And look, bigger picture, where is the world heading?
07:59The world is still heading electric.
08:02The technology is there.
08:03The innovation is there.
08:04We are in the early stages.
08:05Tech is only going to better.
08:07Costs are only going to go down.
08:08And we want to make sure Scout is prepared for the next 100 years.
08:12We're not building a two-year brand and not be braced for now times only.
08:17Hey, Scott, it's no secret.
08:19Volkswagen is behind this.
08:20You have run Volkswagen.
08:22You've run Audi, the U.S. businesses.
08:26Keith, Monica, and Craig all said, hey, ask them if they're going to make Audis there.
08:31Ask them if they could make Porsches there.
08:33Because those brands need a footprint in the U.S., right?
08:36And you're developing an all-new plant.
08:38Is that a possibility?
08:41It's an absolute possibility.
08:43And as you know, there's been a number of press articles, so nothing I'm going to confirm or deny here.
08:47But certainly there's a possibility that other cool group products could definitely, definitely be built there.
08:54And, of course, that helps with utilization, scale, and gives a natural footprint.
08:59But nothing to state here.
09:01But I think you're exactly right.
09:03If you look at this platform, body-on-frame electric, body-on-frame range extender, the capabilities,
09:09if you look at these segments, and whether they're Toyota Land Cruisers or Defenders or, of course, Broncos and F-150s,
09:17these are popular, popular segments.
09:19They're growing more popular by the day.
09:21So certainly there's an opportunity there, but nothing to announce yet, Matt.
09:24This is a great idea.
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