The company also planned a second plant in Florence to supply a BMW plant in Mexico, but that’s now on hold as the additional production is being shifted to the first plant.
AESC is one of the companies South Carolina has worked with and provided millions in incentives to in order to build up the state’s electric vehicle industry as motorists shift away from traditional internal combustion vehicles.
But for AESC and South Carolina’s electric vehicle industry, which includes the automakers and companies that build car components, to thrive, people ultimately will need to buy the vehicles.
Adoption of those vehicles received a boost during President Joe Biden’s administration when the Inflation Reduction Act included a $7,500 tax credit for new electric vehicle purchases.
But purchasing electric vehicles could become more expensive if federal lawmakers lessen or even remove the tax credit, a stated goal of President Donald Trump.
According to a study for the National Bureau of Economic Research, removing the tax credit could cut electric vehicle sales by 27%.
Spending billions to help the EV industry
South Carolina has been betting on the growth of the electric vehicles and people buying those cars will only help the industry flourish.
In a 2023 investment that could transform the Midlands, South Carolina ponied up $1.3 billion in incentives to attract Scout Motors to South Carolina.
Scout Motors is building a $2 billion plant in Blythewood with the intention of employing 4,000 people in the Midlands to build electric vehicles.
South Carolina promised $226 million for Redwood Materials to build a $3.5 billionelectric vehicle battery manufacturing plant in Berkeley County.
Even BMW’s $1.7 billion expansion in Spartanburg also received state assistance, albeit not directly to the company. The Coordinating Council for Economic Development awarded a $65 million from the state’s closing fund to help Spartanburg County with costs related to the project.
The state has promised more than $255 million to help AESC build its plant. It includes $135 million for Florence County to help with project costs, and $120 million to help pay for off-site infrastructure, training facility and site preparation.
“AESC is bullish on domestic manufacturing in the United States, and the state of South Carolina as a partner,” said Raj Shah, chief communications officer for AESC. “As battery technology and supply chains in North American improve, we anticipate robust opportunities for growth, and minimal impact from policy changes.”
As construction takes place on its first facility, which is slated to open in 2026, a planned second facility in Florence County is now on hold. The facility was planned to build battery components for BMW’s operations in Mexico. However, those operations will now be incorporated into the first facility.
AESC would not comment on the volume of its battery production.
The company and the Department of Commerce said AESC had yet to receive any of the additional $111 million in state incentive cash promised for the second planned facility.
“Due to efficiencies increasing output in the original gigafactory, AESC informed state and local officials that this facility will meet customer demand,” Shah said.
Scout Motors taking reservations
Scout Motors already is taking reservations for the vehicles expected to start coming off the manufacturing line in 2027.
Scott Keogh, Scout’s president and CEO, said the company didn’t factor the $7,500 tax credit or any tax incentives for consumers into its business model. He conceded having the tax credit available for consumers provides additional runway to get the business off the ground.
Keogh also told reporters at an event unveiling its electric vehicles to state lawmakers, that Scout has not had discussions with the Trump administration about the EV industry before it took office.
“You can’t plan a strategic business case over how our government moves or doesn’t move,” Keogh told reporters in November. “You got to make a business case on are we making a really cool product that a customer really wants to buy at a really good price? And that’s what we’ve done. (The) $7,500 would have been a nice complement, but we’ll move on without it, whichever way it decides to turn.”
BMW’s investment in its Spartanburg plant will include assembling six fully electric vehicles by 2030. But production in the Spartanburg plant will still include plug-in hybrid vehicles and traditional internal combustion vehicles, said plant spokesman Steve Wilson.
“Flexibility will be our strength during this time of transition,” Wilson said.
BMW currently offers four fully electric models in the U.S., sales of which increased by more than 12% in 2024 compared to 2023, the company said.
The German automaker also said a transition to electric vehicles would take place over time and will rely on consumer demand, the availability of minerals and components needed by EVs, and the growth of a reliable, high-speed charging infrastructure.
“In the meantime, we also will continue to follow our strategy of ‘technology openness’ where we offer our customers the freedom to choose a vehicle with whichever drive train best suits their needs – whether that be one of our highly efficient internal combustion vehicles, a plug-in hybrid electric vehicle, or a full battery electric vehicle,” BMW spokesman Phil DiIanni said in an email to The State.
Redwood Materials CEO JB Straubel has a positive look at the change in administrations and how it could handle the tax credit.
Straubel said the Trump administration could move to make sure the the credit applies to vehicles that have purely domestic parts rather than applying the credit to vehicles with materials that are imported from overseas.
“I think there’s a pathway for how the new Trump Administration might reconcile the (Inflation Reduction Act) to make some adjustments and reduce the outflow of money,” Straubel said during an industry discussion. “I do think there’s a path with the Trump Administration to, instead of just slashing and burning IRA, be more strategic and say, okay, well, how can we match (the Congressional intent) with what the new administration is trying to achieve?”
Gov. Henry McMaster, who touts economic development deals and has worked to help the electric vehicle industry flourish in the state, said he has not discussed the industry with Trump.
“If you take a tax credit away, that might have an impact on somebody,” McMaster said. “No matter what you buy, but if you’re selling a good product, and you’re in a free market, which is what he’s in favor of, which is a free and fair market, I think we’ll be in superb shape, and the rest of the country will be in good shape as well.”
McMaster remains confident the industry will do well even if the tax credit goes away.
“I don’t know what is going to happen, but if that is a strong industry, and I believe it will be, it’ll be just fine,” McMaster said. “I think they could operate without the tax (credits). It may be difficult to start without some help, but once you get started, that’s what they’re doing, they can keep right on the rolling.”
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