Scout Motors is designing its future electric and hybrid vehicles to reduce reliance on rare earth materials, a move that could help the Volkswagen-backed startup sidestep growing geopolitical and supply chain risks.
“We’re going to use less rare earths,” Scout CEO Scott Keogh told Bloomberg TV. “It can be done and that’s how we’re engineering the vehicle,” Keogh noted. The company is specifically rethinking components such as brakes and drive units to achieve this goal.
The move comes as rare earths take center stage in U.S.-China trade negotiations. These materials, critical for producing electric motors, smartphones, and other tech, are primarily controlled by China, giving the country significant leverage in trade talks.
Moreover, major automakers have voiced concern over access to these resources. Last week, Ford CEO Jim Farley described rare earth supplies as “day-to-day,” even as U.S.-China discussions signal possible progress. Ford temporarily shut down its Chicago plant last month due to a shortage.
Scout is closely monitoring the rare earth situation as it ramps up the development of its South Carolina manufacturing facility. The brand, a revival of the iconic off-road nameplate under Volkswagen AG, plans to launch the all-electric Traveler SUV and Terra pickup truck in 2027.
Rare earth materials such as neodymium and dysprosium are commonly used in the magnets that power electric vehicle motors. Although alternatives exist, many carry performance or cost trade-offs. As automakers scale EV production globally, the search for substitute materials has intensified—partly to reduce environmental impact, but increasingly to protect against global supply chain disruptions.
