Savannah, Ga. – Georgia state and local governments are giving Hyundai Motor Group $1.8 billion in tax credits and other incentives, according to a signed agreement released 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 state history and comes just months after Georgia reached another major deal with electric vehicle maker Rivian to build a plant in the state.
“This generation of projects not only strengthens our position at the forefront of the transition to electric vehicles, but also ensures that thousands of Georgians across the state will benefit from the jobs of the future,” Pott said in a statement. Wilson, State Economic Development Commissioner.
Hyundai executives and Gov. Brian Kemp announced the deal in May on the 1,170-hectare project site in Bryan County, west of Savannah. Hyundai plans to start construction on the plant next year and start producing up to 300,000 vehicles a year by 2025. The new plant will also manufacture vehicle batteries.
But officials refused to divulge any concessions promised to the automaker until the deal is signed.
The offer released Friday is worth about $300 million more than the promised incentive for Rivian. Hyundai will provide approximately $228,000 per job created in Georgia and four counties in the Savannah area.
Georgian authorities insist it is a worthwhile investment. Wilson said Hyundai’s payroll at the new plant is expected to reach $4.7 billion over 10 years. The parts suppliers are expected to create thousands more jobs in the state.
The $1.8 billion stimulus is the largest subsidy program ever promised to an auto plant by a U.S. state, said Greg LeRoy, executive director of Good Jobs First, who is skeptical of subsidizing private companies.
“It’s fundamentally very risky, Mr. Leroy warns, because you’re betting a lot on one company and one facility.”
Local governments are giving Hyundai more than $472 million in property tax relief, although Hyundai will pay more than $357 million in taxes over a 26-year period starting in 2023.
The company will receive more than $212 million in state income tax credits at a rate of $5,250 per job over five years. If Hyundai didn’t pay that much corporate income tax, the Georgia company would instead pay personal income taxes collected from Hyundai workers.
State and local governments spent $86 million to purchase the plant site. The government will spend $200 million to build and improve roads, and another $50 million to finance construction, machinery and equipment. Sales tax deductions for expenditures on construction materials and machinery cost $396 million.
Georgian officials say Hyundai will have to pay back part of the incentives if the company falls short of 80% of promised investment or employment.
Kia, another subsidiary of Hyundai Motor Group, received more than $450 million in incentives for a plant in West Point, southwest of Atlanta. Georgia has pledged $300 million to SK Innovation as an incentive for a $2.6 billion battery factory the Korean company is building northeast of Atlanta, employing 2,600 workers.