Scout Motors, in the midst of launching Charlotte HQ, faces auto sales lawsuits
As Scout Motors continues to move ahead with plans for its new corporate headquarters in Charlotte, the electric vehicle producer also is juggling lawsuits in several states over its direct-to-consumer sales tactics.
The lawsuits come from auto dealers in California, Florida, Colorado, New York and Connecticut.
In March, Sunrise Imports of New York and Curran Volkswagen of Connecticut sued Scout and its parent company, Volkswagen, in the U.S. District Court for the Eastern District of Virginia. The automotive groups accused Volkswagen of violating a standard dealer agreement, which obligates the company to sell its products through authorized dealerships.
The complaint seeking class action status, and aims to represent all U.S. Volkswagen dealerships.
The dealers also accuse Volkswagen of creating Scout Motors as an “alter ego” shell company to sell new electric SUVs and trucks directly to the public without paying commissions or providing business to dealerships, according to the lawsuit.
It also noted that Scout’s leadership is mostly former Volkswagen executives, including CEO Scott Keogh, who previously served as president and CEO of Volkswagen Group of America.
Scout Motors declined to comment to The Charlotte Observer about the litigation over its direct-to-consumer approach, which was announced in October 2024. During that announcement, the company called the model the best way to support customers through one-to-one relationships “rooted in trust and transparency.
“From the start, customers will know what they are paying and can expect full price transparency,” Scout stated. “Vehicle purchases will be completed in minutes, not hours. Scout Motors will build dedicated retail spaces to engage with our customers in person.”
More than 150,000 people have already paid $100 deposits to reserve Scout vehicles online, which are not going to dealers, the suit added. Dealers will not benefit from financing, servicing and repairs.
In 2023, Scout lobbied California lawmakers to allow direct-to-consumer sales, but was told by its legal counsel that this business model would face legal hurdles, according to the dealers’ suit.
The plaintiffs are seeking more than $5 million in damages, along with a permanent injunction to stop direct sales.
Scout Motors faces national legal challenges
In another case, a federal judge in March denied Scout’s motion to dismiss the suit filed by the California New Car Dealers Association. The plaintiffs say Scout’s $100 reservation program constitutes “competition” by a manufacturer with its own franchisees, which is prohibited under a California vehicle code.
Chief Judge Cynthia Bashant ruled that the dealers had provided enough evidence to proceed with claims regarding unfair competition.
Responding to the California suit, Scout denied the allegations that it violated vehicle codes or engaged in unfair competition. Scout said it operates independently of its parent Volkswagen, although it is a member of the group by virtue of its ownership structure.
“Scout Motors does not have franchised dealers,” the company stated in 2024. “Scout vehicles have never been sold through any brand, including the Volkswagen and Audi brands. In the future, Scout Motors will operate an independent and exclusive network of retail locations.”
Scout Motors in Charlotte and the Carolinas
International Harvester produced the Scout vehicle from 1961 to 1980. Known as the first vehicle built to handle off-road driving and family duty, it developed a reputation as a rugged, do-it-all truck.
In 2022, Volkswagen launched Scout Motors to revive the brand with a new lineup of all-electric trucks and SUVs. The company says it now has 1.3 million square feet of assembly and body-shop space, and employs more than 4,000 production workers.
Last November, Scout Motors announced it was launching its $207 million global corporate headquarters in Charlotte’s Plaza Midwood area, and expects to produce 1,200 high-paying jobs for the region. Gov. Josh Stein was on hand for the high-profile announcement.
For the headquarters, Scout Motors will take over a 145,000-square-foot building for its main office at the Commonwealth development.
Scout will lease the rear portion of the historic property, built in the early 1910s off Commonwealth Avenue, and partner with a developer to renovate the building for vehicle engineering and research-and-development work. The company is looking to bring its teams and products on a single campus.
Its plans for initial staffing and office development began this year, with full headquarters operations scaling up over several years.
Scout did not provide the number of current workers, but more than 60 Charlotte-based roles are available, according to the company’s jobs website.
A second office building is planned as Scout works toward a 1,200-person workforce, with construction expected to begin in the first half of 2027.
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Scout Motors in the Carolinas
The company already has a strong presence in the Carolinas.
In 2024, Scout Motors began construction on a production site in Blythewood, South Carolina, along Interstate 77 just outside Columbia.
The 1,600-acre property includes a 1,100-acre main plant.
Scout expects to begin building vehicles by the end of this year, with trucks and SUVs going on sale soon after. More than Over 14,000 people have shown interest in the roughly 4,000 jobs there, The State in Columbia previously reported. Scout also plans a Supplier Park next to the main factory.
