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Scout Terra pickup truck and Scout Traveler SUV concepts

Scout

NASHVILLE, Tenn. — Volkswagen-backed Scout Motors revealed its first electric vehicles Thursday and announced plans for the brand to expand its lineup to include an emerging type of plug-in hybrid electric vehicle in addition to EV models.

Scout, a former American vehicle brand from 1961 to 1980, was expected to exclusively offer EVs in a bid for the German automaker to expand its presence in the U.S. However, slower-than-expected adoption of EVs and higher costs have led it to change course and include extended-range electric vehicles, or EREVs.

“Being a startup that moves quickly, we can pivot,” Scout CEO Scott Keogh, a longtime auto executive who previously led VW’s operations in the U.S., told CNBC. “The pivot that we made a number of months ago into offering range extender definitely was a smart play.”

EREVs are basically a type of plug-in hybrid electric vehicle. They include EV motors and battery cells, as well as a traditional internal combustion engine to power the vehicle’s electric components when the battery loses its energy. The engine essentially acts as a generator to power the EV components when needed.

Scout Terra pickup truck concept

Keogh said Scout added EREVs to better protect the brand from any market volatility amid less-than-expected consumer demand for EVs.

“We think electrification is the future. Range extender sets it up as an EV car, so it introduces people to electrification, yet it has a super smart, let’s say, ‘backup plan,'” he said during an interview Thursday. “It will drive like an EV.”

He said Scout has no plans to offer a traditional, non-electric vehicle with only an internal combustion engine.

The company’s first vehicles — a full-size pickup truck and large SUV — will cover about 40% of the highly profitable U.S. sales market.

Keogh said the company targets to be profitable on an operational basis within the first full calendar year after initial production of the vehicles, which will be built at a $2 billion plant that’s under construction in South Carolina.

“If you look at these profit pools, these two areas, from this size pickup truck to this sized SUV … these are the largest profit pools in the world,” Keogh said.

Scout Traveler SUV concept 

Scout

Being profitable during that timeframe would be quite a success, as current EV startups such as Rivian Automotive and Lucid Group lose tens of thousands of dollars on each vehicle they produce after several years.

Meanwhile, Keogh said an announced software deal between VW and Rivian will not impact Scout’s operations. He described the $5 billion software deal, which includes the establishment of a joint venture, as an “exciting opportunity” for Scout.

“It’s good for scaling. It’s good for technology. It’s good for everything,” Keogh said.

Scout’s South Carolina plant is planned to have a production capacity of 200,000 vehicles. Scout expects to use batteries — the most expensive part of an electric vehicle — from VW’s joint venture battery cell manufacturer in Canada.

The company opened reservations for the vehicles Thursday night on its website. Scout plans to sell the vehicles directly to consumers instead of through a traditional franchised dealer network like VW does in the U.S.

New SUV, truck

Scout’s first two vehicles will be the Traveler SUV and Terra pickup truck, scheduled to arrive in 2027.

The company revealed “production-intent concept vehicles” — which means they are largely expected to be the same vehicles that go on sale — Thursday outside of Nashville, Tennessee.

Interior of Scout Traveler SUV concept

Scout

Both the Traveler and Terra are expected to start between $50,000 and $60,000 with available incentives, according to Scout. Keogh said pricing for the EREVs is expected to be in that range as well. He declined to say if they will cost more or less than the all-electric models.

The Traveler SUV is expected to account for two-thirds of the company’s initial sales, Keogh said.

The EREV vehicles will feature more than 500 miles of range, according to the company, compared with 300 miles of range for the all-electric models.

The designs of the Traveler and Terra are modernized versions of former Scout vehicles. They feature similar design characteristics but in smoother, more stylish exteriors. The interiors of the vehicles feature large horizontal screens and soft-touch materials.

VW acquired the Scout trademark and name following the global conglomerate’s $3.7 billion acquisition of Navistar, a successor of Scout’s original owner International Harvester, in 2021.

Scout Traveler SUV concept 

Fully electric Scout vehicles are targeted to climb 100% grades and accelerate 0-60 mph in as quick as 3.5 seconds and offer nearly 1,000 lb.-ft. of torque, the company said.

Scout said the vehicles will use the North American Charging Standard, an 800-volt architecture with up to 350-kilowatt charging capability, and will be capable of bi-directional charging that will allow the vehicle to act as a generator.

Tough market, competition

The SUV is expected to be a competitor to traditional off-road SUVs from Jeep as well as the Ford Bronco and Toyota Land Cruiser. It’s larger than Jeep’s well-known Wrangler, which is currently available as a plug-in hybrid electric vehicle.

The truck is a full-size pickup — a segment currently dominated by Ford, General Motors and Stellantis’ Ram brand. But the electric pickup market where Scout will compete remains a developing market.

Automakers such as GM and Ford rushed to release all-electric pickup trucks early in this decade to compete against several EV startups, many of which never materialized, as well as Tesla. Stellantis is expected to release all-electric and EREV full-size pickups by next year.

Scout Traveler SUV concept 

But after rushing the vehicles to market, sales slowed. Much like the overall EV industry, the large vehicles went from commanding significant price premiums to being highly incentivized.

Overall, this electric “truck” market, including the SUVs, accounted for nearly 58,000 vehicles sold during the first half of this year, according to estimates from Motor Intelligence. That’s less than 1% of the roughly 7.9 million light-duty new vehicles sold during that time in the U.S., but a 35% quarterly increase from the first to the second quarter, according to the data.

Keogh believes Scout can differentiate itself in the market with its products, lower pricing and brand appeal. Additional Scout products are expected to follow in the years ahead, Keogh said.

“Can we consider some point in the future sizing down? Absolutely,” he said. “You want to throw the dart at the best place first. And I think we’ve done that between these two vehicles.”

Small business owners are collectively breathing a sigh of relief at the Federal Reserve’s widely-anticipated decision to cut interest rates last week, and new data show owners expect to put that increased capital to work.

CNBC and SurveyMonkey’s Small Business Survey for Q3 found that owners said lower interest rates will lead them to increase investments, expand their business or increase inventory. The poll was taken September 3-9, before the Fed meeting where a rate cut was expected, among a national sample of 2,276 self-identified small business owners ages 18 and up online.

Main Street has been closely monitoring interest rates. Data from the National Federation of Independent Business, a small business lobbying group, found interest rates on short maturity loans stood at 9.5 percent in August of this year, up from 7.6 percent in January of 2023. In addition, 60 percent of owners said they were not interested in borrowing right now, due in part to high rates.

Lower rates can free up resources for owners to allocate to other areas of their business, including remaining competitive on hiring, according to Holly Wade, director of the NFIB’s Research Center.

“That would be a great benefit for them to see if they can’t be more competitive in that space on wages and benefits and ease up some of those cost pressures that they’ve been dealing with for the last three or so years,” Wade told CNBC in an interview.

Closely tied to interest rates is inflation. One in three small business owners in CNBC and SurveyMonkey’s survey believe that inflation has peaked, up 9 points from last quarter’s 24 percent reading. But two-thirds still believe it will continue to rise despite optimism for inflation relief hitting its highest level since CNBC and SurveyMonkey began asking that question, and the highest reading this year. Still, owners are cautious, as 38 percent say inflation is the biggest risk to their business, nearly three times higher than the next biggest risks, consumer demand and interest rates.

In addition, overall confidence increased in the quarterly CNBC/SurveyMonkey poll to 51 out of 100. That’s up four points from last quarter and nine points from the same quarter last year, and the first time during the Biden presidency that it has risen above 50, a “net confident” reading.

Boeing Machinists union members picket outside a Boeing factory on September 13, 2024 in Renton, Washington. 

Stephen Brashear | Getty Images

It’s been just over a month since more than 30,000 Boeing machinists walked off the job after overwhelmingly voting down a tentative contract. Costs and tensions have only risen since then.

The strike is adding to pressure on Boeing’s new CEO, Kelly Ortberg, who was brought in over the summer to solve the plane maker’s various troubles. The strike, which S&P Global Ratings estimates costs Boeing more than $1 billion a month, bookends an already difficult year that started with a near-catastrophic blowout of a 737 Max door plug and comes six years after the first of two fatal Max crashes put the storied manufacturer in constant crisis mode.

The union and company remain at an impasse, and airplane production at factories in the Seattle area and other locations has been idled, depriving Boeing of cash. Boeing last week pulled a sweetened contract offer that the union had rejected, saying it wasn’t negotiated.

Boeing officials had been upbeat to airline customers about getting to a deal in the weeks before the original vote, according to people familiar with the matter who spoke on the condition of anonymity because the conversations were private.

But that optimism didn’t pan out, as workers on Sept. 13 voted 95% against an initial tentative labor deal.

“They’ll have to increase their offer. There’s no doubt about that,” said Harry Katz, a professor who studies collective bargaining at Cornell University’s School of Industrial and Labor Relations. He said one of the union’s demands, a return to a pension plan, is unlikely, however, and estimated the strike could last two to five more weeks.

Acting Labor Secretary Julie Su on Monday was set to meet with the two sides “to assess the situation and encourage both parties to move forward in the bargaining process,” a spokeswoman for the Labor Department said.

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The process of ending strike has turned more fraught, with federally mediated talks breaking down midweek.

Boeing on Thursday said it filed an unfair labor practice charge with the National Labor Relations Board that accused the International Association of Machinists and Aerospace Workers union of negotiating in bad faith and misrepresenting the plane makers’ proposals.

Late Friday, Jon Holden, president of the striking workers’ union, IAM District 751, pushed for a return to negotiations.

“CEO Ortberg has an opportunity to do things differently instead of the same old tired labor relations threats used to intimidate and crush anyone that stands up to them,” he said in a statement. “Ultimately, it will be our membership that determines whether any negotiated contract offer is accepted. They want a resolution that is negotiated and addresses their needs.”

Boeing’s unionized machinists are not receiving paychecks and lost their company-backed health insurance at the end of September. However, unlike during the last Boeing factory strike in 2008, there is more contract work in the Seattle area to help workers fill the gaps. A union message board posts job opportunities like driving for food delivery services and warehouse work.

Slashing workforce

A Boeing 737 MAX aircraft is assembled at the Boeing Renton Factory in Renton, Washington, on June 25, 2024. 

Jennifer Buchanan | AFP | Getty Images

After the stock market closed Friday, Ortberg said the company plans to cut its global workforce by about 10% “over coming months,” including layoffs of executives, managers and employees.

He also told staff that Boeing will stop producing commercial 767 freighters when it fulfills its backlog in 2027 and that the delivery of its 777X will be delayed yet another year, to 2026.

The surprise cuts came alongside preliminary financial results that showed deepening losses: Boeing said it expects to lose nearly $10 a share for the third quarter and that it will incur charges of about $5 billion in its commercial and defense units. The manufacturer hasn’t had an annual profit since 2018. Ortberg faces investors in his first full earnings call as CEO on Oct. 23.

“The thing is once they get 737 production on track all their money problems are gone but they’re not willing to settle to make that happen,” said Richard Aboulafia, managing director at AeroDynamic Advisory. “They’re firing a lot of people who could make that [stable production] happen. It seems like they’re kind of burning down their own house.”

Aboulafia estimated labor in final assembly of an aircraft accounts for about 5% of the airplane’s cost.

Ortberg is now tasked with drumming up cash and stopping the bleeding as the company’s losses mount. Boeing’s shares are down almost 43% this year through Monday’s close, the steepest drop since 2008.

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“We also need to focus our resources on performing and innovating in the areas that are core to who we are, rather than spreading ourselves across too many efforts that can often result in underperformance and underinvestment,” Ortberg said in a note to staff on Friday.

S&P Global Ratings last week warned the company that it was at risk of a downgrade to junk status, as halted production of Boeing’s bestselling 737 Max and its 767s and 777s costs the company more than $1 billion per month. The estimate includes previously announced cost cuts like temporary furloughs, a hiring freeze and a halt of most purchase orders for affected aircraft.

Boeing is “facing issues on quality, labor relations, program execution and cash burn, which seem to have created a continuous doom loop cycle,” said Bank of America aerospace analyst Ron Epstein in a note Friday. He said Boeing’s early financial release on Friday likely points to an equity raise in the works of as much as $15 billion.

Boeing 737 fuselages on railcars at Spirit AeroSystems’ factory in Wichita, Kansas, US, on Monday, July 1, 2024. 

Nick Oxford | Bloomberg | Getty Images

The announced job cuts come after Boeing and the rest of the aerospace supply chain worked to hire and train new machinists and other specialists after pandemic-era buyouts and layoffs of thousands of employees.

Instability at Boeing could fan out to its suppliers. Boeing’s 737 fuselage maker, Spirit AeroSystems, is considering furloughing workers in its cost-cutting contingency plans, a spokesman said, adding it hasn’t made any decisions. Boeing is in the process of acquiring that company.

“They’re probably telling us a story about cost savings carrying them through,” Aboulafia said of Boeing’s latest cost cuts. “When has stuff not working stopped them from trying it again?”

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