Owing to its unique geometry, the kagome lattice hosts various many-body quantum states including frustrated magnetism, superconductivity, and charge-density waves (CDWs). In this work, using inelastic X-ray scattering, we discover a dynamic short-range √3×√3×2 CDW that is dominant in the kagome metal ScV₆Sn₆ above T_CDW ≈ 91 K, competing with the √3×√3×3 CDW that orders below T_CDW. The competing CDW instabilities lead to an unusual CDW formation process, with the most pronounced phonon softening and the static CDW occurring at different wavevectors. First-principles calculations indicate that the √3×√3×2 CDW is energetically favored, while a wavevector-dependent electron-phonon coupling (EPC) promotes the √3×√3×3 CDW as the ground state, and leads to enhanced electron scattering above T_CDW. These findings underscore EPC-driven correlated many-body physics in ScV₆Sn₆ and motivate studies of emergent quantum phases in the strong EPC regime.