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When you think of companies that manufacture vehicles, Magna International may not be on your list, but it is in fact the largest Tier One supplier to the automotive industry and operates several assembly plants around the world that build cars for other companies. One of its subsidiaries, Magna Steyr based in Graz, Austria, has been tapped by Volkswagen Group to develop its new line of Scout electric vehicles.
In 2002, Magna Steyr took over Daimler’s Eurostar vehicle assembly facility, which has the capacity to produce approximately 200,000 vehicles per year, making it the largest contract manufacturer for automobiles in the world.
According to Wikipedia, Magna Steyr developed Mercedes-Benz’s 4Matic all-wheel drive system and was the sole manufacturer of all E-Class 4Matic models between 1996 and 2006. The company also undertook substantial development on the BMW X3 and manufactured all original X3s as well as the Aston Martin Rapide and Audi TT.
Want to know what cars Magna Steyr currently manufactures? Here’s the list:
- Mercedes-Benz G-Class (1979–present)
- Jaguar E-Pace (2017–present)
- Jaguar I-Pace (2018–present)
- BMW Z4 (2018–present)
- Toyota Supra (2019–present)
- W Motors Fenyr SuperSport (2019–present)
- Fisker Ocean (2022–present)
In March 2017 Magna Steyr started production of the new BMW 5 Series sedan in conjunction with BMW Group’s manufacturing plant in Dingolfing, Germany. The Sony Vision-S concept car was developed and built in cooperation with Magna Steyr.
Magna Steyr To Develop Scout EVs
That’s quite a resume for a company most people have never heard of, which is why Volkswagen Group felt comfortable hiring Magna Steyr to develop its Scout rugged off-road electric vehicles. The development contract is worth €450 million, according to German news source Kleine Zeitung, which cited sources who claim to be familiar with the arrangement between the two companies.
According to Automotive News Europe, the order from Volkswagen is Magna Steyr’s biggest development contract to date. Development work is already underway by Magna engineers in Graz and the US, and the two Scout vehicles — a pickup truck and an SIUV modeled after the original Scout vehicles — should be ready for series production by the end of 2026 following extensive prototype testing.
Volkswagen said in March it will build a US assembly plant to manufacture Scout vehicles in Blythewood, a town near Columbia, South Carolina, which is about 350 miles east of its factory in Chattanooga, Tennessee. That factory will have a capacity of more than 200,000 vehicles annually, which is a whole lot of rugged off-road electric vehicles for people to drive to work or the mall while pretending they are cowboys on the set of Yellowstone. Volkswagen seems to think it has a handle on what American car buyers want and it could very well be right.
Scout Prototypes On The Road Next Year
A report by Autoblog says Scout Motors CEO Scott Keogh spoke with Automotive News (paywall) recently and provided some information on the development and the timeline for those Scout vehicles. Earlier this year, Scout hired Chris Benjamin as lead designer. Benjamin’s 25 years in the auto business including six years at Fiat Chrysler/Stellantis overseeing interior design for Chrysler, Dodge, Jeep, and Ram. Keogh said, “The design of the product is, I would say, 85, 90, 95 percent of the way there. Proportions readily dialed in, exterior design dialed in.” The full passenger space is a bit further out, but he expects to take a seat in a full-sized interior model this coming week.
Autoblog says there are about 300 people working for Scout Motors at present with another fifty or so being added each month. In addition to pulling in-house engineering talent from the VW Group — Scout chief technical officer Burkhard Huhnke being one prominent example — Scout is also attracting employees from competitors in the electric vehicle space, including Tesla and Rivian. It did not name any of those recent recruits to the cause of electrified off-roading.
Early development mules are expected to roll out of locked garages early next year, probably around the same time Scout breaks ground on its production facility in South Carolina. Keogh confirmed to Automotive News that Magna will not manufacture the Scout prototype vehicles. The Scout division will handle that task. The prototypes will ride on the Scout-specific, ground-up chassis developed with Magna’s assistance, which Keogh described as a “100 percent capable, American, robust, full platform.” It has passed all of its tests on paper and in simulations. The road trials scheduled to begin next year will provide feedback on those designs.
Reveal Coming In Q3
Scout plans to reveal its first pre-production vehicles in the third quarter of 2024. Keogh said the SUV will be the first one to market because Scout was most known for being “a rugged SUV brand.” The full size pickup truck isn’t due on the market until an estimated six or seven months after the SUV, so prototypes of the truck may not be revealed until 6 months or so after the SUV breaks cover. Actual production is not expected to begin until late 2026, which suggests the first Scout vehicles that customers can actually buy may be 2027 models.
Earlier this year, Scout reaffirmed its commitment to a $40,000 SUV as the first model, although it is not clear whether the company is assuming that will be the effective price after any federal tax incentives. That issue is somewhat fraught with uncertainty right now as new Treasury rules for battery materials and components are set to go into effect on January 1, 2024.
We do know that Volkswagen is planning a new battery factory in Canada, presumably to guarantee its US made electric vehicles a ready supply of US compliant batteries so they can continue to qualify for federal EV incentives. A four door 2024 Ford Bronco starts at around $41,000; the least expensive 2024 Volkswagen ID.4 starts at about $40,000. Peering into the dim mists of the future and taking into account the numerous news accounts claiming the price of EV batteries is expected to trend downward in coming years, it seems plausible that Scout could have at least one model that starts under $40,000 by 2027.
Scout And Franchise Dealers
By creating Scout as a discrete company selling electric vehicles, Autoblog says it expects Scout to skip a traditional dealership network and much of the overhead involved. We think that statement may be a bit too blasé. There is no way Volkswagen dealers are going to sit quietly by while the company takes a slice out of their business model.
We can see the new company doing more of its business online, with dealers acting as test drive locations, delivery agents, and service facilities. Dealers spend extraordinary amounts of money on financing those hundreds of vehicles on their lots, not to mention property taxes on the land they occupy. There are significant savings available to them with a “just in time” build to order system.
Nothing ever stays the same. The traditional dealership model is bound to adapt and change as the EV revolution moves forward. More internet sales are a given. How dealers adjust to change will determine their viability. It will be interesting to see how Volkswagen and its franchise dealers handle the transition to electric cars.
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