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Wednesday, October 6, 2021

Ford Announces Giant Electric Vehicle Plant in Western Tennessee

 On September 27, Ford Motor Company announced plans to invest $5.6 billion at the Memphis Regional Megasite in Stanton, Tennessee, to build an electric vehicle (EV) assembly and battery plant, jointly with SK Innovation. The facility, dubbed “Blue Oval City” by Ford (in a reference to its corporate logo), is projected to employ 5,800 people as Ford makes its first big foray into EV production. The same week, Ford and SK Innovation revealed plans for two more battery plants in Glendale, Kentucky, south of Louisville, at an estimated cost of $5.8 billion.

Together with all the other recently announced investments in EV manufacturing, Ford’s new project highlights the commercial success of electric vehicles. But if you’re like me, you want to know about the subsidies it received. Glad you asked!

The short answer is that we have only partial information so far. As with the Nissan plant in Canton, Mississippi, or the deal made by Memphis for Electrolux in 2011, there will doubtless be multiple subsidies whose details will come out long after the initial announcements. That said, what we know already is ominous.

First, the state of Tennessee has pledged over $500 million to be given as a grant to the two companies; it will be voted on in a special legislative session in the near future.

From there, adding up the incentives becomes more difficult. The Memphis Regional Megasite is a subsidy in itself: 3,600 acres (about 5.6 square miles) with dedicated infrastructure. Tennessee Governor Bill Lee (R) said that over $200 million has already been invested in the Megasite.

The biggest incentive is likely to be electricity discounts: Blue Oval City will get power from the federally owned Tennessee Valley Authority (TVA). Electric vehicle and battery manufacturing are energy-intensive, and large rate discounts over the life of the facilities will add up. Hundreds of millions of dollars is a certainty, and it is easy to imagine the electricity subsidy alone totaling billions. Don’t believe me? Check out the Alcoa Aluminum plant in Massena, New York, where hydro-power discounts are saving the company $5.6 billion over 30 years, now the largest subsidy ever given in the United States for a single project (with Boeing’s $8.7 billion Washington State deal withdrawn in a WTO settlement).

The state will also establish a satellite campus of the Tennessee College of Applied Technology (TCAT) at the location, part of an $80 million investment into the TCAT system.

Finally, there is no information available yet on local subsidies. Property tax breaks (called PILOTs in Tennessee when a public entity technically retains ownership of the project) and sales tax exemptions are likely to add many millions more to the incentive package.

What is the final number likely to be? My guess is over a billion dollars, but the question is how much over. We’ll see, eventually. If we’re lucky.


Cross-posted with Good Jobs First.

Thanks to my colleagues Greg LeRoy and Kasia Tarczynska for helpful editorial suggestions.

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