The state of Georgia and local governments are giving $1.8 billion in tax breaks and other incentives to Hyundai Motor Group in exchange for the automaker building its first U.S. plant dedicated to electric vehicles near Savannah, according to the signed agreement disclosed Friday.
The deal calls for Hyundai to invest $5.5 billion in its Georgia plant and hire 8,100 workers. It’s the largest economic development deal in the state’s history and comes just months after Georgia closed another major deal with electric vehicle maker Rivian to build a factory in the state.
“Not only do these generational projects solidify our spot at the vanguard of the EV transition, but they also ensure that thousands of Georgians across the state will benefit from the jobs of the future,” Pat Wilson, the state’s economic development commissioner, said in a statement.
Hyundai executives and Gov. Brian Kemp announced the deal in May with a champagne toast at the project’s sprawling 2,900 acre (1,170 hectare) site in Bryan County, west of Savannah. Hyundai plans to start construction on the plant next year and begin producing up to 300,000 vehicles per year in 2025. The new factory also will produce vehicle batteries.
But officials declined to reveal what incentives the automaker had been promised until after the agreement was signed.
The package disclosed Friday is worth roughly $300 million more than incentives promised to Rivian. It amounts to Georgia and four counties in the Savannah area giving Hyundai about $228,000 per job created.
Georgia officials insist it’s a worthwhile investment. Wilson said Hyundai’s payroll at the new plant is expected to reach $4.7 billion over 10 years. Parts suppliers are expected to create thousands of additional jobs in the state.
The $1.8 billion in incentives is easily the largest subsidy package a U.S. state has ever promised for an automotive plant, said Greg LeRoy, executive director Good Jobs First, a group skeptical of subsidies to private companies.
“That’s inherently super-risky,” LeRoy said, “because you’re betting a huge amount on one company and one facility.”
Local governments are giving Hyundai more than $472 million in property tax breaks, though Hyundai will pay more than $357 million in lieu of taxes over a 26-year period starting in 2023.
The company will also receive more than $212 million in state income tax credits, at $5,250 per job over five years. If Hyundai didn’t owe that much state corporate income tax, Georgia would instead give the company personal income taxes collected from Hyundai workers.
The state and local governments spent $86 million to purchase the plant site. And the state will spend $200 million on road construction and improvements, plus $50 million more to help fund construction, machinery and equipment. Sales tax exemptions on construction materials and machinery expenses are estimated to cost $396 million.
Georgia officials say the deal requires Hyundai to pay back a portion of the incentives if the company falls below 80% of promised investment or employment.
Kia, another subsidiary of the Hyundai Motor Group, got more than $450 million in incentives for its plant in West Point, southwest of Atlanta. Georgia has promised SK Innovation $300 million in incentives for a $2.6 billion, 2,600-worker battery plant that the Korean company is building northeast of Atlanta.