America’s EV factory boom brings billion-dollar projects to tiny towns

America’s EV factory boom brings billion-dollar projects to tiny towns

Cars won’t start rolling off the assembly line at the “Metaplant” Hyundai Motor Co. is building on 3,000 wooded acres in Bryan County, Georgia, for at least a year. But the $7.6 billion electric-vehicle and battery project a half-hour west of Savannah already has a firm grip on the imagination of nearby residents.

One rumor making the rounds this summer was that Hyundai planned to buy the local golf course to turn it into housing for some of the plant’s eventual 8,500 workers—or to give them something to do on their downtime. Meanwhile, developers in the area are itching to turn soybean fields into subdivisions, local real estate agents say, though they’re stymied for the time by inadequate water and sewer lines.

In nearby Pembroke, which has a population of only 2,600, Shannon Thurston says he’s been seeing new faces at Taco Depot, the Mexican restaurant he and his wife run; he assumes they are Korean executives Hyundai has dispatched to oversee the project. “Several of what I believe to be upper management eat here now,” Thurston says. “I’ve gotta work on my Korean, for sure.”

Across the US, spending on the construction of manufacturing facilities reached $198 billion on an annualized basis in August, an almost 66% increase from the previous year and the highest level since the Bureau of Economic Analysis began tracking the data in the 1950s.

The flurry of activity is being fueled by a pair of laws Congress approved last year that together offer hundreds of billions of dollars in subsidies, tax credits and other incentives to spur the building of chip fabs and plants turning out EVs, batteries and components. It’s Washington’s bid to catch up to China in zero-emission autos and reclaim leadership in semiconductors, an industry the US pioneered.

America’s factory boom promises to bring investment and well-paying jobs to areas desperate for them. But along with the bulldozers and hard hat crews also come worries about whether there’s adequate infrastructure to support the new factories and concerns about the changing fabric of surrounding communities.

Few places are reaping the benefits of the Biden administration’s industrial policy push more than Georgia, where the state and local governments are also dangling tax breaks, free land and other perks to lure manufacturing jobs. Governor Brian Kemp has called Hyundai’s Bryan County plant the biggest greenfield investment in Georgia’s history. EV startup Rivian Automotive Inc. is plowing $5 billion into a factory 45 miles east of Atlanta that’s supposed to employ 7,500 workers by 2028. And there’s the multiplier effect of auto suppliers and other businesses moving to the Peach State to cater to the manufacturers moving in.

The US badly lags other major markets in adoption of EVs: Fully electric cars along with plug-in hybrids made up a little less than 9% of all passenger cars sold in the first half of 2023, compared with 27% in China, according to BloombergNEF. Now US demand is getting a jolt from the introduction of federal tax credits of as much as $7,500 on purchases or leases of new EVs, available through the Inflation Reduction Act that President Joe Biden signed into law in August of last year.

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To take advantage of the tax incentives—scheduled to extend through the end of 2032, but at risk of being repealed if some Republicans get their way—automakers building US plants are trying to move from groundbreaking to ribbon-cutting in record time. Oscar Kwon, whom Hyundai tapped to lead the project in Georgia, spent four years in India helping to open a factory for Kia. He’ll have a little more than two years to get the facility near Savannah up and running. To help move things along, the state and municipalities are contributing $1.8 billion in tax credits, sales tax exemptions and road projects. “It’s a race,” says Trip Tollison, chief executive officer of the Savannah Economic Development Authority. “Everybody is trying to do all they can to get their product on the road.”

The ambitions of Hyundai and partner LG Energy Solution Ltd. will strain local supplies of workers, water and more. Michael Toma, an economist at Georgia Southern University, estimates the Hyundai Metaplant will support a total of 20,000 jobs—just shy of half at the facility itself, 5,000 more at auto suppliers and several thousand more at businesses that pop up to serve them. All that is equal to 10% of the Savannah area’s entire workforce.

A group of counties has pooled resources to build a massive wastewater treatment facility in anticipation of the plant’s arrival. But officials in Bryan County, which has a population of about 48,000, are tapping the brakes on other development so they can better assess infrastructure needs. After a surge in applications to rezone farmland near the factory site to allow for the construction of warehouses and multifamily residential complexes, commissioners voted to institute a temporary moratorium on approvals. “I can tell you, I’m not going to get an apartment complex in the next 18 months,” says Audra Miller, Bryan County’s community development director. “Yes, there will be growth. Will it be perfectly aligned with when Hyundai opens the doors? Probably not.”

Even if a large share of Hyundai’s future workforce ends up commuting in, Pembroke and other nearby towns will likely see their Main Streets transformed once the facility opens. That’s what happened in West Point, Georgia, a town of 3,700 that borders Alabama where Kia opened its first US factory in 2009. The area was once home to several textile mills, but it went into decline in the 1980s and ’90s as jobs moved offshore.

Mayor Steve Tramell says the town never saw the new housing it expected because developers found it more lucrative to build pricier homes closer to Atlanta. Still, at least 10,000 people drive to the Kia plant and its suppliers daily, and “our downtown’s booming,” he says.

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Georgia, along with Tennessee and the Carolinas, is part of a new EV and battery belt taking shape in the US. But the auto industry’s transition to zero-emission vehicles is also pulling investment into the old Rust Belt. In Fayette County, Ohio, on an industrial site the size of 60 football fields surrounded by soybeans and corn, Honda Motor Co. and LG Energy Solution are sinking as much as $4.4 billion into a lithium-ion battery plant that’s slated to start production in two years.

Jamie Gentry, an economic development consultant who was part of the team that negotiated the deal, says the county had spent two decades trying to lure a large factory—with no success. But there’s been increased interest over the past year from car companies scouting locations for factories. “I’ve been in this business for 22 years, and I’ve never seen anything like it,” he says.

The Honda-LG investment has sparked a land grab of sorts. Jaret Bishop, a developer in Washington Court House, the county seat, says that thanks to the arrival of construction crews, all his apartments in the area are rented. He plans to build more housing on 150 acres of farmland he’s acquired.

Jason Langley, owner of a real estate and auction business run out of a 1920s-era theater, is hopeful that an influx of new businesses will help fill vacant storefronts downtown. “I like the idea that people can actually stay here locally and have a good-paying job, and they don’t have to drive or move out of state,” he says.

Marsha Arnold, an owner of Werner’s Smokehouse Bar-B-Que in nearby Jeffersonville, says that without the battery plant, she wouldn’t have been able to reopen the restaurant she and her partners closed in March 2022. “It’s gonna be good for us, for the community,” she says. “There’s going to be a future that also comes with challenges, but we’ll be able to sort through all of that.”

It’s not clear how many workers will move to the area rather than commute from nearby cities— Cincinnati, Columbus and Dayton are all less than an hour’s drive away—but the coming changes are of “a scope that we can’t imagine,” says Bob Peterson, a farmer and former Fayette County commissioner who’s now a state representative. Locals fear losing the rural character of the place, but he says, “You have to have economic growth. You have to have jobs. Not everybody can come back to the farm.”

Some might call it progress, but not Gene Baumgardner, who for 20 years has been growing corn, soybeans and wheat on 3,000 acres about 5 miles from the Honda-LG plant. “We as farmers are running an industry, and I don’t see why we have to give up one for another,” he says.

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Tony Anderson, a current Fayette County commissioner, says local officials met with their counterparts in Union County, about 60 miles north, in March to get a sense of what to expect. Honda opened a motorcycle plant there in 1979, its first foray into manufacturing in the US, and added a vehicle assembly plant in 1982.

Honda’s long presence in Ohio, where it has a total of five facilities, helped it secure $156 million in state incentives for the new battery plant, including tens of millions for water and transportation upgrades, plus $237 million in grants from Ohio’s private economic development entity. (That pales next to the $2.1 billion in perks state authorities have promised to Intel Corp., which is turning an area east of Columbus into a giant hub for the manufacture of semiconductors.)

Honda and its subsidiaries employ about 8,000 in Union County, according to administrator Bill Narducci. And the county’s population has increased steadily since the Japanese automaker made landfall, from 29,400 in 1979 to almost 67,000 today. The area is home to companies from nine countries, which together employ almost 40% of workers there. “The economy is a lot different now than it was then in terms of workforce, and that’s a struggle that I think every community has,” Narducci says.

Rick Riggle, chief operating officer of the Honda-LG Energy joint venture, has met with local officials and area residents to address any anxieties. “Our intent is not to change the community,” he says. “We want to engage with the community, grow with them.”

Biden and Democrats are counting on the new factories in Ohio and other potential swing states to translate into gains in the 2024 election. But Fayette County voted 75% for Donald Trump over Biden in 2020 and Jeff Hoppes, a farm equipment mechanic who’s been a Jefferson Township trustee for 22 years, is doubtful that the Honda-LG development will cause the area’s GOP faithful to convert. “Whoever votes for Biden in this county is true-blue Democrat,” he says.

A White House tally of private investment announced since Biden took office shows $139 billion in commitments for EVs and batteries nationwide and $231 billion for semiconductors and electronics. If communities aren’t seeing the benefits yet, it’s because many of the projects haven’t started or are in the early stages of being built, US Secretary of Energy Jennifer Granholm told Bloomberg Businessweek during a groundbreaking in August for a $250 million expansion of a battery recycling plant in Lancaster, Ohio—a project made possible with $82 million in federal grants. “They have to know that this is really happening, that it’s not just politicians talking, but that it’s actually happening in their communities,” Granholm said. “I just think it’s a little early, because people haven’t seen it yet.”