NASHVILLE, Tenn. — VolkswagenThe Scout Motors-backed company unveiled its first electric vehicles on Thursday and announced plans for the brand to expand its range with an emerging type of plug-in hybrid electric car in addition to EV models.

Scout, a former American car brand from 1961 to 1980, was expected to offer exclusively electric cars in an effort to help the German automaker expand its presence in the US. The slower-than-expected adoption of electric cars and higher costs have led to a change in the company. of course and include extended-range electric vehicles, or EREVs.

“Because we are a startup that moves quickly, we can pivot,” Scout CEO Scott Keogh, a longtime auto executive who previously led VW’s U.S. operations, told CNBC. “The switch we made a few months ago to offering range extender was definitely a smart choice.”

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

Keogh said Scout added EREVs to better protect the brand from market volatility amid lower-than-expected consumer demand for electric vehicles.

“We think electrification is the future. The Range Extender makes it an EV car, so people can get introduced to electrification, but still it has a super smart, shall we say, ‘back-up plan’,” he said during Thursday’s an interview. “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 and a large SUV – will cover about 40% of the highly profitable US market.

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

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

Being profitable during that period would be quite a success, as current EV startups like Rivian automotive industry And Clear group after several years losing tens of thousands of dollars on every vehicle they produce.

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

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

Scout’s South Carolina plant is expected 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 on its website Thursday evening. Scout plans to sell the vehicles directly to consumers rather than through a traditional franchise dealer network as VW does in the US

Scout’s first two vehicles are the Traveler SUV and the Terra pickup, expected to arrive in 2027.

The company unveiled “concept vehicles with production intent” outside Nashville, Tennessee on Thursday – meaning they are expected to be largely the same vehicles that go on sale.

According to Scout, both the Traveler and Terra are expected to start between $50,000 and $60,000 with available incentives. Keogh said prices for the EREVs are also expected to be in that range. He declined to say whether 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 have a range of more than 800 kilometers, according to the company, compared to a range of 300 kilometers for the fully electric models.

The Traveler and Terra designs are modernized versions of former Scout vehicles. They have similar design features, but have a smoother, more stylish exterior. The interior of the vehicles features large horizontal screens and soft-touch materials.

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

All-electric Scout vehicles are intended to climb 100% grades and accelerate from 0 to 60 mph in just 3.5 seconds and deliver nearly 1,000 lb.-ft. torque, the company said.

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

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

The truck is a full-size pickup – a segment currently dominated by Ford, General engines And Stellantis’ Brand Aries. But the electric pickup market that Scout will compete in remains a developing market.

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

But after the vehicles were rushed to market, sales slowed. Like the overall EV industry, the big vehicles went from commanding significant price premiums to being highly incentivized.

According to estimates from Motor Intelligence, this market for electric ‘trucks’, including SUVs, totaled almost 58,000 vehicles sold in the first half of this year. That’s less than 1% of the roughly 7.9 million new light-duty vehicles sold in the U.S. in that time, but a quarterly increase of 35% between the first and second quarters, according to the data.

Keogh believes Scout can differentiate itself in the marketplace with its products, lower prices and brand appeal. More Scout products are expected to follow in the coming years, Keogh said.

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