Expected Hyundai EV plant in Georgia part of larger industrial wave.
Tesla proved the concept, now the gold rush is underway.
Electric vehicles make up about 3% of all vehicles sold in the United States. They are expected to increase exponentially due to stricter emissions and fuel economy standards, and as the cost of electric vehicles becomes competitive with conventional gas-powered models.
“When it comes to new manufacturing facilities, (EVs) are where the dollar is spent,” said David Clayton, CEO of Clemson University International Center for Automotive Research. Electric vehicles̵[ads1]7; are performance vehicles and they are luxury vehicles and people want them. The problem is that car manufacturers cannot produce them fast enough. “
There is enormous potential, but also a lot of competition, financial risk and uncertainty about which companies – and which US states – will emerge as the winners.
Governor Brian Kemp and his predecessor, Nathan Deal, have sought to position Georgia as a hub in the electrifying future of the automotive industry. It includes billions of dollars in subsidies and incentives offered to companies and supported by taxpayers.
Even if Georgia lands the Hyundai Motor EV plant, as expected, and even with Rivian, and a SK Innovation battery factory in Jackson County, the state’s requirements as an EV building capital will have to be proven by manufacturers as they scale up and develop vehicle consumers want to buy.
Many other states also have large EV footprints already, including California, Nevada and Texas, which Tesla picked for plants.
Guests look at Rivian’s R1T electric truck during a news conference at Liberty Plaza in front of the Georgia State Capitol in Atlanta on Thursday, December 16, 2021. Electric vehicle maker Rivian confirmed its plans to build a $ 5 billion assembly plant and battery factory in Georgia, as Governor Brian Kemp called “the largest single economic development project ever in the history of this state.” (Hyosub Shin / Hyosub.Shin@ajc.com)
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
Guests look at Rivian’s R1T electric truck during a news conference at Liberty Plaza in front of the Georgia State Capitol in Atlanta on Thursday, December 16, 2021. Electric vehicle maker Rivian confirmed its plans to build a $ 5 billion assembly plant and battery factory in Georgia, as Governor Brian Kemp called “the largest single economic development project ever in the history of this state.” (Hyosub Shin / Hyosub.Shin@ajc.com)
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
Battery charging infrastructure – both on the open road and among tools to help drivers connect at home – must also be developed in the coming years at a cost of billions of dollars, some of which are included in the recent federal law on two-party infrastructure. .
A shaky economy, inflation, a network of supply chain problems for the automotive industry and a looming challenge to obtain rare earth minerals to make powerful electric car batteries are among the threats facing carmakers – and states, such as Georgia, that increase government funding to support their growth .
Gas-powered models still pay the bills and provide the profits for most car manufacturers, Ketels said, while electric cars are an investment that will take years to pay off. But no car manufacturer wants to be left behind.
“It would be foolish for me to say that all the companies here right now will succeed in that transition,” he said. “It’s a delicate dance.”
But just think of some of the announcements that have come in the last year:
–Ford launched BlueOval City, a multi-billion dollar EV assembly complex in Tennessee, and a network of battery factories in Tennessee and Kentucky with partner SK Innovation. The Detroit automaker also launched its F-150 Lightning pickup to rave reviews and announcements plans to expand production.
–General Motors announced plans to invest $ 7 billion in electric vehicle production and has launched GMC Hummer EV and unveiled battery-powered Silverados and Sierras.
–Toyota announced a battery factory in North Carolina and introduced a plug-in crossover developed in tandem with Subaru.
–Volvo, BMW, Mercedes-Benz, Volkswagen and other European giants have committed billions to their battery-powered divisions. Luxury carmaker Audi now spends more of its advertising on electrical equipment than on cars powered by conventional engines, according to Bloomberg.
–And not to be outdone, Tesla has opened its “Gigafactory Texas” near Austin. CEO Elon Musk said late last year that the plant represents a long-term investment of $ 10 billion plus.
Georgia makes expensive games on Rivian, Hyundai
Rivian, a company founded a dozen years ago, was listed in November with one of the largest IPOs in US history. The stock price has returned to earth, much like the rest of the stock market, but the company still plans to build 600,000 vehicles a year at its two factories after the Georgia plant is at maximum capacity.
The company makes the flagship R1T truck and R1S SUV and vans for Amazon. The R1T won the coveted Motor Trend Truck of the Year award, the first for an electric.
On Wednesday, Rivian said it will launch its R2 midsize SUV with production in Georgia in 2025 with some of the $ 17 billion in cash it has on hand.
But some of the challenges for the sector now face Rivian. The California-based company has struggled to secure computer chips and other components, limiting production at its first plant in Illinois.
Rivian said Wednesday that they have built just 5,000 vehicles since production began, and about half will arrive in the first quarter of this year. Rivian confirmed its scaled-down forecast to build 25,000 vehicles this year and plans to start a second shift in Illinois soon. Earlier this week, however, it recalled around 500 trucks due to potentially defective airbag sensors in the front passenger seats.
Tesla, founded in 2003, missed delivery forecasts for years and burned capital as it struggled to master mass production. Rivian will probably have to deal with many of the same challenges, say analysts.
In the first quarter, Rivian reported only $ 95 million in revenue and a loss of $ 1.6 billion.
To win Rivian, state and local officials offered a $ 1.5 billion package of subsidies, tax breaks and other incentives Georgia’s largest ever offered. The incentive package for Hyundai Motor can compete with that, which scares taxpayers’ watchdogs.
Craig Clayton, Sr., connects a rental Tesla to a charger at Camp Creek Marketplace in East Point on Friday 10. December 2021. Clayton rented the car for a trip from Florida to Atlanta because he is interested in buying one and wanted to see. what it was like to take a car ride in an electric car. One problem he found was having to go out of his way to find fast chargers. (Ben Gray for Atlanta Journal-Constitution)
Credit: Ben Gray
Credit: Ben Gray
Craig Clayton, Sr., connects a rental Tesla to a charger at Camp Creek Marketplace in East Point on Friday 10. December 2021. Clayton rented the car for a trip from Florida to Atlanta because he is interested in buying one and wanted to see. what it was like to take a car ride in an electric car. One problem he found was having to go out of his way to find fast chargers. (Ben Gray for Atlanta Journal-Constitution)
Credit: Ben Gray
Credit: Ben Gray
In Hyundai Motor Group, Georgia will have a facility that is likely to produce vehicles for the average consumer. In many ways, Hyundai is a safer bet, say analysts, as one of the world’s largest automakers with a 10% market share in the United States.
Hyundai Motor has deep ties to Georgia. The Kia subsidiary announced its first US plant in West Point in 2006. Today, the factory employs more than 2,700 workers and produces 340,000 internal combustion engine vehicles a year.
The expected EV investment continues a decade-long trend of car growth in the South.
“The Southeast as a whole has really established itself in attracting foreign direct investment,” said Clemson’s Clayton. “The new market participants really put the region on the map for these companies as well … I think there is still more to come.”
Kia’s hiring poster will be displayed along I-85 in West Point on Wednesday, May 11, 2022. Georgia is ready to announce its second electric car facility, a massive Hyundai Motor Group assembly complex that could bring 8,500 jobs to a site near Savannah, people have known with the case told The Atlanta Journal-Constitution. (Hyosub Shin / Hyosub.Shin@ajc.com)
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
Kia’s hiring poster will be displayed along I-85 in West Point on Wednesday, May 11, 2022. Georgia is ready to announce its second electric car facility, a massive Hyundai Motor Group assembly complex that could bring 8,500 jobs to a site near Savannah, people have known with the case told The Atlanta Journal-Constitution. (Hyosub Shin / Hyosub.Shin@ajc.com)
Credit: HYOSUB SHIN / AJC
Credit: HYOSUB SHIN / AJC
Clayton said he expects the new car factories to attract more interest from car suppliers who make everything from seats to windshield wipers to the Southeast.
“It really is a global competition,” he said. “Yes, (car manufacturers) can compare North Carolina and South Carolina and Georgia. But they also make decisions regarding Mexico and Vietnam or China,” which serve the export markets.
One of the factors that will make or break these investments will be access to labor. Georgia’s unemployment reached a historically low 3.1% in March.
“Labor markets are tight and are likely to remain so in the near future,” said Roger Tutterow, a professor of economics at Kennesaw State University. “If they are willing to pay in the form of compensation, they will be able to fill them.”
During the Great Recession, Georgia mourned the loss of GM and Ford plants in the Atlanta area. Less than 15 years later, Georgia is on the brink of two new factories.
“Now we’re getting them to migrate in again,” Tutterow said.
A revelation note
Cox Enterprises, owner of The Atlanta Journal-Constitution, owns a 4% stake in Rivian and provides services to the company. Sandy Schwartz, a Cox leader who oversees AJC, sits on Rivian’s board and owns shares personally. He does not participate in AJC’s coverage of Rivian.
