VW Says There’s Never Been a Better Time to Build an EV Factory in the US

Keith Naughton, Bloomberg News

A Volkswagen AG (VW) logo sits on a a new VW e-Crafter electric truck during a presentation in Hamburg, Germany, on Tuesday, Aug. 28, 2018. Photographer: Krisztian Bocsi/Bloomberg , Bloomberg

(Bloomberg) -- Volkswagen AG said lucrative new US incentives for EV makers were just too good to pass up when weighing to pick a partner or build its own factory to make cars for the new Scout brand.

The German manufacturer this month moved ahead with plans for a $2 billion factory in South Carolina to produce electric SUVs as part of Scout Motors Inc. The factory is due to open in 2026 and will eventually churn out 200,000 EVs annually.

“We view it simplistically a little bit like the Gold Rush,” Scott Keogh, chief executive officer of the Scout brand said Monday, equating the 1849 California Gold Rush with the federal Inflation Reduction Act that provides incentives for domestically produced EVs. “There’s never been a better time to build a factory in America.”

VW considered hiring a contract manufacturer like Taiwan’s Foxconn Technology Group to build its new plug-in pickups and rugged SUVs. But the IRA signed into law in August by President Joe Biden expanded consumer credits of up to $7,500-a-vehicle and added incentives to build EVs and batteries in America. That convinced VW to break ground on its own facility on 1,600 acres near Columbia, South Carolina, which will employ 4,000 workers when it opens in 2026.

VW rose 1.3% in early trading in Frankfurt, taking gains this year to 4.4%.

“If you look at all the, let’s say, opportunities that are coming from the states and the Inflation Reduction Act, the smartest way to handle the factory was to do it yourself,” Keogh said in a briefing with reporters from the plant’s location. “You wanted to get there early so you can get a good location, and if you got there late, you might miss it.”

VW last year resurrected the Scout brand, which was sold from 1960 to 1980 by International Harvester, in hopes of making a dent in the US market that has foiled the German automaker for decades. VW acquired the brand when it purchased Navistar in a deal that closed in 2021.

Scout’s new factory will make SUVs and full-size pickups annually in a bid to take on American stalwarts like the Ford Bronco and Jeep Wrangler, as well as newcomers such as Rivian Automotive Inc.’s truck and RS1 SUV.

(Updates with share price in fifth paragraph)