In the past couple of years, several governors made huge, disastrous bets with taxpayer money on electric vehicle manufacturing projects in their states. With the “E.V. transition” grinding to a halt, and with these public/private ventures approaching their inevitable failure, a day of accountability is looming for those governors.
Many people, including me , have recently documented that 2023 was the year in which the much-hyped “E.V. transition” collided into a wall of consumer rejection. In response, every automobile manufacturer not named Tesla is having to reassess what is a feasible market share of the already negligible non-Tesla space, but it is clear now that there is not, and will not be, a mass market for E.V.s in the U.S.
Legacy auto manufacturers who bet big on E.V.s are looking at significant losses for those bad decisions, but so are investors who sank money into an over-hyped, under-desired product. Regrettably, among the deluded investors who bought into the E.V. hype were the governors of Georgia, Tennessee, and North Carolina. Even more regrettably, it’s taxpayer money that was used by these governors to gamble on these utopian projects. And tragically, there are many powerless, rural landowners who had their properties condemned to be given over to the E.V. hustlers.
With overall E.V. demand settling in at a market share well below 10 percent of the new car market, and with that segment of the car-buying public pretty much only wanting Tesla (and its exclusive hood ornament), it will be interesting to see what political repercussions there are for these boondoggles that credulous governors were seduced into subsidizing. Here'ss a brief overview of what these governors gambled on:
Money, money, money...
1) GEORGIA – Brian Kemp (Rep.)
Brian Kemp has been the favorite mark for the E.V. snake oil salesman. They only needed to say “jobs” to get him to start throwing taxpayer money at electric vehicle ventures. Perhaps the worst of his bad decisions will be the money he has thrown at the unprofitable, cash-burning startup, Rivian. It was announced in 2021 that Georgia had committed up to $1.5 billion in incentives and tax abatements for Rivian to build a plant in a rural area east of Atlanta, with the expectation that the state was buying 7,500 new jobs with Georgia taxpayer money. Kemp touted this job-buying adventure as part of his “pro-business” agenda.
Rivian originally announced that it would start assembling vehicles in Georgia in 2024, with a capability of producing 400,000 per year. (By comparison, mighty Tesla sold a tad under 355,000 vehicles in the United States in 2022.) Rivian’s launch date keeps getting pushed back, and ground has still not been broken. There doesn’t seem to be much need for the plant at all, however, since Rivian’s existing plant in Normal, Ill., has a capacity of 150,000 units per year, triple the 50,122 Rivians sold in 2023. Rivian is burning through billions of dollars per year, it’s losing over $30,000 per unit sold, and its stock price has tumbled 89 percent since the euphoria of its IPO. On top of that, its sales have started trending downward, with fourth-quarter 2023 sales down 10 percent from the previous quarter.
With all that taxpayer money being thrown at E.V. proposals, Hyundai saddled up to get its share from Georgians too, signing up for some free taxpayer money in 2022, then coming back for more in 2023. The commitment from the state now exceeds $2 billion. Hyundai intends to produce 300,00 E.V.s per year, possibly expanding to 500,000. To put that in perspective, neither Ford nor GM can move 100,000 EVs per year, and their buyers include large government and fleet buyers, whereas Hyundai is targeting the consumer mass market, which has already assertively rejected E.V.s.
Before Kemp started directing a firehose of taxpayer money at proposed electric car manufacturing projects, he was throwing taxpayer money at E.V. battery projects. It was back in 2019 that he doled out $300 million in tax breaks, grants, and land to lure battery maker SK Innovation to build an E.V. battery plant in Jackson County. Things haven’t gone as promised, as news broke a few months ago that layoffs are now occurring at that very plant due to weak demand for E.V. batteries.
But not the state's finances.
2) TENNESSEE – Bill Lee (Rep.)
Back in 2021, Tennessee governor Bill Lee announced that a rural area outside of Memphis was going to be the site of a new multi-billion dollar Ford facility to manufacture electric vehicles and batteries. Lee went to the state legislature and had them re-allocate almost a billion dollars from the state’s rainy day fund to help close the deal and to purchase the promised 5,800 jobs from Ford.
As part of the deal, the state of Tennessee is condemning land for access and roadways, much of it from black farmers. Marvin Sanderlin, a longtime local farmer with 400 acres, said he’d like to take advantage of the coming development, too. But the state has taken him to court for 10 acres of his property. The land lies in the path of a planned roadway connecting the Ford plant to the interstate. The state’s offer? $37,500 — or $3,750 per acre. “You can’t buy no land here for $3,500 an acre. You can’t buy a swamp here for $3,500” Sanderlin said.
Ford just suspended plans to build a separate E.V. battery plant in neighboring Kentucky, and with its entire E.V. future seemingly collapsing, there is strong reason to believe there will never be a Ford E.V. built in Tennessee.
3) NORTH CAROLINA – Roy Cooper (Dem.)
In July 2022 North Carolina governor Roy Cooper and Vietnamese auto startup VinFast announced a deal for a $1.2 billion incentive package that would create 7,500 new jobs in a plant producing 150,000 electric vehicles per year. The state of North Carolina also generously agreed to condemn homes, churches, and businesses to make the VinFast deal possible.
As part of its site preparation process, the North Carolina Department of Transportation (NCDOT) also planned roadway improvements to accommodate the traffic a new factory would create. Those plans would require displacing a total of 27 homes, five businesses, and Merry Oaks Baptist Church, which has stood on its spot since 1888.
Vietnam's best friend.
Through the third quarter of 2023 VinFast’s global sales of E.V.s were under 20,000, which included 7,000 units sold to its own taxi subsidiary. Although the North Carolina plant is years away from manufacturing any vehicles, VinFast opened its first U.S. dealership in December 2023, retailing cars manufactured in Asia. Motor Trend magazine did a review of VinFast’s electric vehicle, and it was extremely unfavorable. Aside from bad ergonomics and hidden controls, many basic features did not even work properly, including turn signals, climate control, navigation, the parking brake, and blind spot monitoring.
Land has been condemned and various levels of infrastructure improvement have already commenced at these projects in Georgia, North Carolina, and Tennessee. The respective governors of these states would be wise to start planning now for how to remediate the damage already done, so they are prepared for damage control when the official termination of these ventures is eventually announced.