Boom of American Electric Car Factories: Billion-dollar Projects in Small Towns - Autoblog

The cars won't start rolling off the assembly line at Hyundai Motor Co.'s 3,000-acre Metaplant under construction. in Bryan County, Georgia, for at least a year. But the $7.6 billion electric car and battery project, located an hour and a half west of Savannah, is already attracting local attention.

One of the rumors floating around this summer was that Hyundai was planning to buy a local golf course to turn it into housing for some of the plant's future 8,500 employees, or to give them something to do in their spare time. Meanwhile, developers in the area can't wait to turn soybean fields into residential neighborhoods, local real estate agents report, though they're still facing challenges from a lack of water and sewer lines.

In the Pembroke neighborhood of just 2,600 people, Shannon Thurston says he sees new faces at the Taco Depot restaurant he and his wife own; he assumes they are Korean executives sent by Hyundai to oversee the project. "There are several individuals eating here now who I think are upper management," Thurston says. - "I definitely need to learn Korean. "

U.S. manufacturing construction spending reached a $198 billion annualized rate in August, up nearly 66 percent from the previous year and the highest level since the Bureau of Economic Analysis began tracking the data in the 1950s.

This flurry of activity stems from two pieces of legislation that Congress passed last year that together offer hundreds of billions of dollars in subsidies, tax credits and other incentives to spur the construction of chip factories and plants that make electric cars, batteries and components. It's Washington's attempt to catch up with China in emission-free cars and regain leadership in the semiconductor industry the U.S. has developed.

The U.S. manufacturing boom promises to attract investment and good-paying jobs in a field that desperately needs them. But along with bulldozers and workers in helmets, there are also concerns about having enough infrastructure to support new factories and worries about changing surrounding communities.

Few places benefit from Biden's industrial policy more than Georgia, where state and local governments also offer tax breaks, free land and other incentives to attract manufacturing jobs. Governor Brian Kemp called the Hyundai plant in Bryan County the largest green investment project in Georgia history. Electric car startup Rivian Automotive Inc. is investing $5 billion in a plant 45 miles east of Atlanta that will need to employ 7,500 workers by 2028. And there's a multiplier effect of auto parts suppliers and other businesses moving to the Peach State to serve incoming manufacturers.

The U.S. lags far behind other major markets in electric vehicle strength, with all-electric cars and plug-in hybrids accounting for less than 9% of all passenger cars sold in the first half of 2023, compared with 27% in China, according to BloombergNEF. Now demand in the U.S. is getting a boost from the introduction of federal tax credits of up to $7,500 for buying or leasing new electric vehicles available under the Inflation Reduction Act, which President Joe Biden passed last August.

To take advantage of the tax credits - which are set to last until the end of 2032 but are at risk of being repealed if some Republicans get their way - automakers building plants in the U.S. are scrambling to go from groundbreaking to opening in record time. Oscar Kwon, whom Hyundai has appointed to lead the Georgia project, spent four years in India helping to open the plant for Kia. He'll have a little over two years to get the plant up and running near Savannah. To speed up the process, the state and municipalities are contributing $1.8 billion in tax credits, tax sale exemptions and road projects. "It's a race," says Trip Tollison, executive director of the Savannah Economic Development Authority. "Everyone is trying to do their best to get their product on the road.

The ambitions of Hyundai and partner LG Energy Solution Ltd. burden local resources with laborers, water, and others. Michael Thoma, an economist at the University of South Georgia, estimates that the Hyundai Metaplant will support a total of 20,000 jobs - nearly half at the plant itself, another 5,000 at auto parts suppliers and several thousand more in businesses springing up to service them. All of this represents 10 percent of the Savannah area's entire labor force.

A group of counties have pooled resources to build a huge wastewater treatment facility in anticipation of the plant's arrival. But officials in Bryan County, home to about 48,000 people, are putting the brakes on other construction projects to better assess infrastructure needs. After a flurry of applications to rezone land use near the plant site to allow warehouses and apartment complexes, commissioners voted for a temporary moratorium on approval. "I can tell you that in the next 18 months, I don't have a residential development going up," said Audra Miller, Bryan County's community development director. - "Yes, there will be growth. Will it exactly match the opening of the Hyundai doors? Probably not.".

Even if a significant portion of Hyundai's future employees commute to work rather than relocate from nearby cities - Cincinnati, Columbus and Dayton are all within an hour's drive - the cities of Pembroke and other nearby towns will likely see their primary space change once the plant opens. That's what happened in West Point, Georgia, where Kia opened its first U.S. plant in 2009. The neighborhood used to be home to several textile mills, but it suffered a downturn in the 1980s and 1990s as jobs were moved overseas.

Mayor Steve Tramell says the city never saw the new housing it expected because it proved more profitable for developers to build more expensive homes closer to Atlanta. Still, at least 10,000 people commute to the Kia plant and its suppliers every day, and "our downtown is bustling," he says.

Georgia, as well as Tennessee and the Carolinas, are part of a new electric vehicle and battery belt that is taking shape in the US. However, the auto industry's move to emission-free vehicles is also attracting investment in the old rust belt. In Fayette County, Ohio, on an industrial site the size of 60 soccer fields surrounded by soybeans and corn, Honda Motor Co. and LG Energy Solution are investing up to $4.4 billion in a lithium-ion battery plant set to begin production in two years.

Jamie Gentry, an economic development consultant who was part of the team that led the negotiations, says the county has spent two decades trying to attract a major plant, but without success. However, over the past year there has been increased interest from automobile companies looking for locations to build factories. "I've been in this field for 22 years, and I've never seen anything like this," he says.

The Honda-LG investment has sparked a race for land of sorts. Jarrett Bishop, a developer in the city of Washington Court House, the county's administrative center, says the arrival of construction crews has made all of his apartments in the area rentable. He plans to build more housing on the 150 acres of land he purchased.

Jason Langley, owner of a real estate agency and auction business located in a 1920s theater, hopes a flood of new businesses will help fill unoccupied retail space downtown. "I like the idea that people can stay here in the area and have good-paying jobs without having to leave or move to another state," he says.

Marsha Arnold, owner of Werner's Smokehouse Bar-B-Que in nearby Jeffersonville, says without the battery plant, she wouldn't have been able to rebuild the restaurant, which she and her partners closed in March 2022. "It's going to be good for us, for the community," she says. - "With that will come a future that also comes with challenges, but we can handle all of that. "

It's unclear how many workers will move to the area rather than commute to work from nearby cities - Cincinnati, Columbus and Dayton by