Governor of Georgia Brian Kemp (left) and Hyundai Motor Group CEO Chang Jae-hoon (right) sign a deal at a planned electric vehicle and car battery production site in the US state of Georgia, on Friday local time. (Hyundai Motor Group)
Hyundai Motor Group will receive benefits worth 2.4 trillion won ($1.8 billion) in tax exemptions and incentives from the US state of Georgia in exchange for building its first dedicated electric vehicles manufacturing plant there. The subsidy package of property and income tax exemptions, as well as other incentives in land, infrastructure and equipment purchases, is the largest-ever offered by the US state.
According to the signed deal disclosed on Saturday, the Korean automaker will get a tax exemption worth some 618 billion won for 26 years from 2023, in the largest economic development deal in the state’s history.
Hyundai plans to start construction on the 300,000-unit-a-year EV and battery manufacturing plant spanning over the 3.5-million-square-meter site in Bryan County, west of Savannah, in January 2023. It will begin production in the first half of 2025.
For creating some 8,100 jobs in Savannah, Hyundai will receive an income tax credit of 277 billion won over five years. It will get another 518 billion won tax deduction for construction equipment and building material purchases.
The state government and local county authorities near Savannah will also support the Korean carmaker by covering part of the cost for building roads and purchasing land as well as construction equipment and materials, which total to some 430 billion won.
“Not only do these generational projects solidify our spot at the vanguard of the EV transition, 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.
According to the state’s forecast, Hyundai’s payroll at the new Georgia plant would reach some 6.1 trillion won over a decade. Auto parts makers in the region are expected to create thousands of new jobs.
In exchange for the support deal, Hyundai said it will offer some 467 billion won to the state of Georgia in terms of benefit sharing starting from 2023, over an unspecified time period and frequency.
But the deal requires the company to return part of the incentives if the company falls below 80 percent-level of promised investment or employment.
In May, Hyundai Motor Group Executive Chair Chung Euisun made a surprise announcement on the new investment plan during US President Joe Biden’s state visit to Seoul.
Of the total $10.5 billion pledged, some $5.54 billion will be spent on setting up the automaker’s first dedicated EV plant in a move to solidify its electrification push in the world’s most important automobile market, Chung said.
Hyundai said it selected Georgia due to the state’s speed-to-market infrastructure, workforce, and ability to meet the company’s carbon neutrality standards. Georgia is home to an existing network of Hyundai subsidiaries and suppliers.
Not only the Korean automaker, but global automakers and other Korean firms have been settling in Georgia for its tax incentive programs.
The state of Georgia has offered some $1.5 billion in tax benefits to the US EV startup Rivian.
SK Innovation, which is currently building a 2,600-worker battery manufacturing plant in the state capital of Atlanta, has been promised with some $300 million worth of incentives. Hyundai Motor’s sister company Kia has received $450 million in incentives for building the current plant in Georgia.
By Kim Da-sol (email@example.com