Savannah, Ga. (AP) – Georgia state and local governments are on track to give Hyundai Motor Group $2.1 billion in tax breaks and other incentives after the South Korean automaker and a partner announced last month it would invest an additional $2.1 billion. An electric vehicle complex is being built in Georgia, which will cost billions of dollars.
Associated Press calculations show the estimated incentives would increase more than $290 million from the $1.8 billion deal originally announced last year. Only $2.75 million of this represents additional cash from the state. The rest will come from increased tax exemptions.
The deal calls for Hyundai and battery maker LG Energy Solutions to invest $7.6 billion in the Georgia plant and hire 8,500 workers by the end of 2031. That’s more than the original job estimate of 8,100 at the giant electric vehicle and battery complex being built in Elabel. , west of Savannah.
It is the largest economic development deal in Georgia’s history, and comes with the largest stimulus package.
State leaders say the benefits Georgia will receive outweigh the incentives. Economic Development Commissioner Pat Wilson said Hyundai is projected to generate $4.7 billion in direct wages over the next 10 years. The company has promised to pay workers an average of $58,105 a year, plus benefits.
“As we work together to deliver a state-of-the-art facility in Bryan County that will provide good-paying jobs to Georgians, we know Hyundai Motor Group will give back to the region by investing in our schools, families and communities . . , and we are grateful for those planned investments,” Wilson said in a statement Friday, when the state released a revised stimulus agreement.
Local officials released property tax estimates to the AP on Tuesday.
The Hyundai package has already been described as the largest subsidy package ever promised to a single automotive plant by a US state. That’s according to Good Jobs First, a group skeptical of subsidies to private companies.
Local governments have agreed to reduce property taxes on assembly plants by 2048 and property taxes on battery plants by 2049. During that time, Hyundai is projected to pay $523 million in taxes, while saving $669 million.
The state estimates it will rebate an additional $81.8 million in sales taxes on construction materials and machinery, bringing Hyundai’s savings from those rebates to more than $478 million.
Due to the increase in jobs, the company is also projected to receive an additional $10.5 million in state income tax credits, amounting to $5,250 per job over five years. This will bring Hyundai’s state income tax savings to $223 million. If Hyundai did not owe so much state corporate income tax, Georgia would instead tax the company personal income collected from Hyundai workers.
The state will spend an additional $2.75 million to support construction, machinery and equipment, bringing the total to approximately $53 million.
Parts of the deal that did not change included spending by state and local governments of more than $112 million to purchase and prepare 2,913 acres (1,179 ha) of land for the plant and $175 million on water and sewer facilities. . The state will spend $210 million on road construction and improvements and more than $153 million on recruiting and training workers.
The deal requires Hyundai to return a portion of the incentives if the company falls short of 80% of promised investment or employment.
Hyundai plans to begin EV production in 2025, initially making 300,000 vehicles per year, and possibly expanding to 500,000 per year. Since the company announced its first US plant dedicated entirely to electric vehicles, suppliers have pledged to invest $2.2 billion and hire 5,300 people.
These announcements are part of the electric vehicle and battery land rush across the United States. Under the US Inflation Reduction Act, EVs must be assembled in North America, and a certain percentage of their battery parts and minerals must come from North America or a US free trade partner to qualify for the full $7,500 EV tax credit.
Jeff Amy reported from Atlanta.
Jeff Amy and Russ Bynum, The Associated Press