Scout Hasn't Sold A Single SUV And It's Already At The Center Of A New Lawsuit

Scout Hasn't Sold A Single SUV And It's Already At The Center Of A New Lawsuit

Mike Garrett

Tue, January 27, 2026 at 8:15 PM UTC

Scout Traveler SUV parked in garage - Scout Motors

Even as many automakers dial back their ambitious electrification plans in the wake of shifting consumer tastes and regulatory environments, the Volkswagen Group is continuing full steam ahead with the launch of its new Scout Motors electric pickup and SUV brand. Scout Motors is an ambitious step for Volkswagen, taking a historic American name and bringing it back with retro-influenced pickups and SUVs. Now part of the brand's ambition is already running into legal issues in the state of Colorado.

Like Tesla and Rivian, the latter of which Scout Motors trucks hope to directly compete against, Scout plans to operate with a direct-to-consumer sales strategy. This would bypass the third-party dealer franchise system that traditional automakers use, including the other brands owned by the Volkswagen Group. However, because Scout plans to sell pickups and SUVs that have gasoline engines as range extenders, a group of car dealers is suing the state of Colorado for giving Scout Motors a license to sell vehicles directly to buyers without using franchised dealerships.

Beyond just the situation in one state, the lawsuit represents a broader argument over what exactly constitutes an electric vehicle, and also how the new Scout Motors brand will coexist alongside the Volkswagen Group's larger, more established brands.

Not a new issue

Scout Terra pickup parked in mountains - Scout Motors

The argument over direct-to-consumer sales of EVs in the United States is not a new one. Tesla has long faced challenges to its strategy of bypassing the traditional car dealer model. Even today, with Tesla as large as it is, there are differing rules over how and where the company can sell cars from state to state, with some states, like Wisconsin not allowing Tesla dealerships at all. In Colorado (and other states), dealer franchise laws have allowed exemptions for EV-only brands like Tesla, Rivian or Lucid to sell cars directly to consumers, bypassing the dealer franchise system.

This current issue with Scout Motors follows a similar playbook to Tesla's previous legal battles, but the lines are blurred because of Scout's plans to sell extended-range EVs or EREVs, which use a small gasoline engine to charge the battery to extend total range and provide a backup plan if no electric charging is available.

But the Colorado challenge takes a unique angle and isn't just because Scout plans to sell gasoline range-extended EVs direct-to-consumers. This suit, initiated by a group of Colorado Volkswagen, Audi, and Porsche dealers, claims the state license would illegally allow VW, which owns Scout Motors, to compete directly against its own dealers that also sell gasoline-engined vehicles.

EV or hybrid?

Front grille of Scout Traveler SUV - Scout Motors

This is not the first challenge that Scout has faced in its plans to enter the market. Scout has pushed for the US Department of Justice to eliminate laws blocking direct-to-consumer sales while facing lawsuits and challenges from dealer groups from across the country. And in the Colorado case, the dealers are hoping to frame the range-extended Scout models as hybrids rather than EVs. Scout Motors, meanwhile, argues that EREVs fall under the state's definition of an electric vehicle, as they don't need gasoline to operate.

Beyond the broader argument over dealer franchise laws, the legal differences between hybrid vs EREV vs EV could certainly come into play more as automakers pivot away from pure EVs. RAM, for example, has been planning to debut its RAM 1500 REV for a few years now, and Ford recently announced that the next-generation F-150 Lightning will have gasoline assistance.

Similar to Scout's current predicament, Ford had previously faced concerns from its dealers about the idea spinning off its EV operations under their own flag. Meanwhile, you can see why the Volkswagen Group and Scout Motors would like to avoid the traditional dealer system for this new brand. VW's wounds from the ID Buzz's troubled launch are still fresh, with excessive dealer markup surely being a contributor to that retro-influenced EV's cold reception thus far. Time will tell whether Scout's positioning as an 'independent' brand owned by a legacy automaker will be a burden or a boost to its success.

Want the latest in tech and auto trends? Subscribe to our free newsletter for the latest headlines, expert guides, and how-to tips, one email at a time. You can also add us as a preferred search source on Google.

Read the original article on SlashGear.

View comments

About our ads

Source