Legacy Dealers Sue Colorado For Calling Scout An Ev Brand

A group of Volkswagen, Audi, and Porsche dealers in Colorado is making one thing clear in a new lawsuit: they don’t like the free market and want their competition shut down.

The suit, filed against the state over its decision to grant Scout Motors a dealer license last month, argues that regulators misinterpreted franchise law and stretched the definition of what qualifies as an EV-only automaker. The result could influence how other states handle direct-to-consumer car sales in the future.

A License Under Legal Fire

The lawsuit, filed January 20 in Denver District Court, seeks judicial review of a December 16 vote by Colorado’s Motor Vehicle Dealer Board that approved Scout’s application to sell vehicles directly to consumers. Ten dealerships are named as plaintiffs, with more potentially joining the case.

More: VW Dealers Are Furious, Scout Couldn’t Care Less

At the heart of the dispute, first spotted by Auto News, is whether Scout actually qualifies for exemptions in Colorado law that allow certain manufacturers to bypass the traditional franchise model. Those carve-outs are intended for EV-only brands that don’t already have franchised dealers of the same line-make in the state. State regulators concluded Scout met those requirements. The dealers strongly disagree.

When an EV Isn’t Electric Enough

Scout’s planned extended-range electric vehicle system is at the heart of the suit. It will be offered alongside fully electric versions of the Traveler SUV and Terra pickup. Scout describes the setup as an extended-range EV, where a gasoline engine acts solely as a generator to supply electricity to the motors. In other words, there’s no direct physical connection between the gas engine and the wheels.

Dealers argue that distinction doesn’t hold up under Colorado law. In their view, the system functions more like a plug-in hybrid, disqualifying Scout from exemptions meant for companies like Rivian and Lucid that sell battery-electric vehicles only.

The suit also notes that Scout plans to source the gasoline engine for its extended-range system from Volkswagen Group’s manufacturing operations in Mexico,more further muddying claims of independence.

A Legal Attack Without a Named Rival

Interestingly, the suit doesn’t go after Scout Motors or Volkswagen directly. Instead, it challenges the state agency’s interpretation of the law and asks the court to declare the dealer license unlawful and block its enforcement.

None of this is shocking. Dealers in other states are fighting hard to eliminate Scout as competition unless they get to play middleman. So far, dealers haven’t picked up any big victories in the battle, but the war is far from over.