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The electric vehicle boom brought massive investments to parts of America that don’t typically vote blue, but now those bets are looking shaky as the industry pumps the brakes on its electric dreams.
Over the last twenty years, car and battery manufacturers poured more than $200 billion into building electric vehicle plants across the United States, according to research firm Atlas Public Policy. The money didn’t spread evenly across the political map. Republican-controlled areas got the lion’s share, with 84 percent of battery plant dollars and 62 percent of vehicle factory money landing in their districts.
These plants were supposed to bring jobs, more than 200,000 of them. Three-quarters of those positions would have been in Republican areas. The Southeast alone grabbed 40 percent of all the investment money, building on its long history as a car-making region that stretches back fifty years.
But the ground shifted beneath these plans. Federal tax breaks that made electric cars cheaper disappeared, and fewer people bought EVs than expected. Now companies are scrambling to change course, switching production lines to make different types of vehicles or completely different products to avoid red ink and job cuts.
Hyundai Motor Group watched the shift happen in real time
The company, which sells Hyundai, Genesis, and Kia vehicles, had climbed to second place in electric car sales behind Tesla, according to CEO José Muñoz. Then the government incentives vanished.
The numbers tell the story. Hyundai’s electric sales were climbing during the first three months of last year. By the final quarter, they had dropped by half. “We still do better than the industry,” Muñoz said according to CNBC. “But it had an impact in the industry, which we could clearly see in the fourth quarter.”
Hyundai had already placed a massive bet on Georgia. In 2022, the company announced a $12.6 billion factory and battery operation near Savannah, the biggest investment Georgia had ever seen, beating out Rivian’s $5 billion plant outside Atlanta. The plan called for hiring 8,500 workers by 2031, plus another 6,900 at nearby supplier companies. So far, only 1,440 people have jobs there as of January.
Georgia led the country in electric vehicle factory investment last year. Governor Brian Kemp, a Republican, wanted the state to become the “electric mobility capital” of America.
The Savannah plant was meant to build only electric vehicles at first. Hyundai even rushed construction to get its popular Ioniq5 crossover eligible for the $7,500 federal tax credit, which required American assembly and parts. But new legislation wiped out those credits on September 30.
Hyundai responded by adding another $2.7 billion to boost output by 200,000 vehicles, targeting half a million cars each year. The mix changed dramatically – now the factory will make ten different models, both electric and hybrid. Muñoz expects only 30 percent will be electric, with the rest split between hybrids and gas-powered cars.
The financial damage across the industry runs deep. John Murphy from Haig Partners figures American automakers will likely lose at least $100 billion on their electric vehicle bets. “It’s the single biggest capital allocation mistake in the history of the automotive industry,” Murphy said.
The losses have started showing up
As reported by Cryptopolitan previously, Ford announced a $19.5 billion hit on its unprofitable electric car division in December. General Motors took a $7.6 billion charge. Foreign makers like Honda, Porsche, and Volvo warned investors about billion-dollar losses too.
Muñoz thinks Hyundai will dodge these write-offs thanks to flexible factories that can build many different models, letting the company shift as conditions change. “The more flexibility you have, the less issues you have with changes in the environment,” he said.
The industry’s expectations have crashed. President Biden wanted electric vehicles to make up 50 percent of new car sales by 2030. “That was the target,” said Peter Tadros from parts maker Bosch. “Then, over the years, it dropped to 35, to 25, to 17. So now we’re at 17% projection for 2030.”
Bosch spent $250 million on its Charleston, South Carolina factory, including an electric motor division. “Now the investment was not made for 50% market, but it was not made also for 17%,” Tadros said.
The company moved almost all electric motor workers to other departments making stability control systems and fuel injectors – parts needed for regular gas engines. Still, Tadros admitted the electric bet “cause some pain.” The equipment sits ready but underused. “It’s here. It’s ready to go,” Tadros said. “But right now, it’s a difficult situation for that segment.”
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