Georgia Taxpayers are Latest Victims of Electric Vehicle Gambles
Taxpayers could be on the hook if electric vehicle (EV) manufacturer Rivian fails to resume progress on its multi-billion dollar Georgia plant.
Rivian announced on March 7 that it would be pausing construction on its $5 billion manufacturing plant that is supposed to be built just east of Atlanta, Georgia, worrying lawmakers and taxpayers in the state that the plant may never be built. However, local authorities had given the company up to $1.5 billion in subsidies and tax incentives with the expectation that Rivian would bring in jobs and tax revenue.
Despite the pause, Rivian has ensured Georgia officials that it is not abandoning the project and that it remains committed to complying with both environmental regulations and the contractual agreements that were previously agreed to. Since the announcement of the pause, Georgia officials have questioned Rivian about how it will solve current issues at the vacant site, including security, stabilizing graded land with vegetation and stormwater drainage on the lot, according to AJC News.
The state claims that no taxpayer dollars have gone to Rivian directly, but instead, taxpayer funds have gone to developing the site of the project, which is still owned by the state but leased to Rivian, a Georgia spokesperson told the DCNF.
Rivian lost over $2 billion in 2023 and more than $3.1 billion in 2022, according to the company’s fourth quarter results. Rivian has had to lay off large portions of its staff in recent months, cutting around 10% of its workforce in February and another 1% in April.
Moreover, the EV maker was approved for up to $15 billion in taxable bonds from a municipal agency last November, backed by rental payments for the site’s land, according to Bloomberg. The $15 billion in bonds allotted by the state to Rivian are commonly called phantom bonds because they aren’t a direct payment and instead act as a way for the state to administer tax breaks by renting out the land of the site to the company, with the EV maker’s tax obligation going toward paying the rent, according to Bloomberg.
“Rivian has restated its commitment to Georgia, and the State and JDA are in steady communication with Rivian regarding its manufacturing plans at Stanton Springs North,” the Georgia Department of Economic Development and Joint Development Authority of Jasper, Morgan, Newton and Walton counties told the DCNF.
Rivian did not respond to a request to comment from the DCNF.
The Georgia Rivian plant has faced criticism since its inception, being named the “Worst Economic Development Deal of the Year” by the Center for Economic Accountability (CEA) in 2022 due to its lack of a clear report proving that it would be beneficial to taxpayers of the state.
“The state had no way of knowing how good an investment it was when it made the deal because it never bothered to do even the most basic analysis to find out,” John Mozena, president of CEA, told the DCNF. “The thing that stood out about Georgia’s deal with Rivian that made us select it as the Worst Economic Development Deal of the Year for 2022 was the way the agencies involved admitted under oath that they had done essentially no due diligence on the company they were investing taxpayers’ dollars in.”
If completed, the plant is expected to create 7,500 jobs with an average yearly wage of $56,000 in the area, creating a total economic value of $7 billion, according to an announcement from the state. The agreement includes a $1.5 billion tax incentive package that includes harsh clawback measures if the promised amount of jobs is not created and $5 billion is not invested by 2028 and maintained through 2047.
A big thank you to everyone in Atlanta who came out to meet R2, R3 and R3X! With Georgia being the home of our next plant, it was extra special to bring these vehicles to the state where so many of them will be built.
Next stop: Seattle, May 4 – 6! More info at… pic.twitter.com/X6aZWxctl2
— Rivian (@Rivian) May 2, 2024
“It certainly looks like the electric vehicle bubble has burst, and no amount of taxpayer bailout money can put it back together again,” Larry Behrens, the communications director for Power The Future, told the DCNF. “This continual pattern of taxpayers being forced to prop up unviable green companies should serve as a warning that ultimately the public will be left holding the bag when reality hits these green dreams. It’s beyond clear that the EV market is faltering, and to put more public dollars behind this failure will do nothing more than throw good money away.”
The growth in the EV sector has slowed in recent months, declining to just 2.7% in the first quarter, down from 47% in the whole of 2023. Total vehicle market share for EVs declined in the first quarter as well, due to a greater increase in the production of traditional vehicles.
Other automakers have also had to push back their EV plans due to a slowdown in the growth of market demand, including Bentley, GM, Ford, Mercedes-Benz and Honda. The Biden administration, in an effort to boost EV production and lower prices for consumers, has created a $7,500 tax credit for EVs depending on where components are made, and has put in place regulations that will force a large portion of vehicles to be electric by 2032.
“At the end of the day, what happened here was that in a rush to take credit for ‘job creation’ in an election year, politicians and bureaucrats made a massive speculative billion-dollar bet with taxpayer dollars with less due diligence than you’d expect from some basement-dwelling day-trader or ‘diamond hands’ meme stock trader on Reddit,” Mozena told the DCNF. “Any private investment advisor or money manager in the real world would find themselves fired, sued and maybe even in jail for this kind of malpractice, but government agencies don’t hold themselves to the kind of standards that they impose on us lesser mortals.”
Since the announcement of the pause, Georgia state lawmakers have questioned if the site will ever be built, pushing to halt infrastructure projects that were underway to provide for the site, according to The Detroit News. “If they come back to Georgia and start making good on their promises, I’ll be the one surprised,” State Sen. Randy Robertson said about Rivian.
It was announced on Thursday that Rivian was granted an $827 million incentive package by the Illinois government to put toward expanding operations at its current plant in the state, according to Reuters. The expansion will help Rivian start producing its cheaper SUV R2 model, which was originally supposed to be built at the Georgia plant.
“Georgia’s taxpayers, I’m sure, will end up taking a hit if this plant doesn’t get built,” Mozena told the DCNF. “It’s doubtful it’ll be worse than the estimated $220 or so per household that the state’s insane film tax credit program costs, or the costs for things like the Braves stadium or other boondoggles. But just maybe Rivian will be enough to get the poor, abused taxpayers of Georgia to finally start holding their leaders accountable for lighting taxpayer dollars on fire like Sherman did to Atlanta.”
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Why do people want a butt ugly vehicle like this. I think most people wouldn’t buy one regardless if it’s gas or electric.. I think this project will crash and burn and taxpayers will get stuck holding the bill.