E.V. Bonanza Flows to Red States That Denounce Biden Climate Policies

Source: By Jack Ewing, New York Times • Posted: Thursday, October 20, 2022

No Republican in Congress voted for the Inflation Reduction Act. But their districts and states will greatly benefit from the investments spurred by the law.

A sport utility vehicle is hoisted on an assembly line at a manufacturing plant.
BMW said on Wednesday that it would expand its manufacturing complex in Spartanburg, S.C.Juan Diego Reyes for The New York Times

Democrats pushed through climate change legislation this year that earmarked tens of billions of dollars to create a U.S. supply chain for electric vehicles. Republicans and the states they represent are poised to cash in on much of the political and economic windfall.

For Republican members of Congress, none of whom voted for the climate law, it’s the best of both worlds. They can call the spending wasteful, while benefiting politically from the jobs and money that car and battery factories bring to their districts.

Even before President Biden signed the Inflation Reduction Act in August, billions of dollars were flooding into electric-car and battery factories. The legislation is expected to supercharge the investment, a large chunk of which is flowing to states whose representatives are often skeptical of climate change and have close ties to coal, oil and natural gas businesses.

States that voted for former President Donald J. Trump will receive most of the grants announced by the White House on Wednesday to promote battery and raw material production in the United States, part of a broad effort to end dependence on China. Companies in 12 states will receive grants totaling $2.8 billion; all but four of those states voted for Mr. Trump in 2020. The grants were authorized by a bipartisan infrastructure law that Mr. Biden signed in November.

Likewise, five of the 10 states that will receive the most private investment related to electric vehicles voted for Mr. Trump, according to data compiled by the Zero Emission Transportation Association, an industry group. They include Tennessee, which is expected to receive $18 billion, more than any other state.

Ideology has not prevented red-state politicians from trumpeting green investments in their districts. The disconnect was on display in Spartanburg, S.C., on Wednesday, when BMW announced plans to upgrade a factory to produce electric vehicles, and to build a new plant nearby to assemble batteries.

Among the South Carolina Republicans on hand to celebrate the $1.7 billion investment was Gov. Henry McMaster, who has called for abolishing the Environmental Protection Agency, yet this month appointed an electric vehicle coordinator to encourage companies to invest in the state.

“The road to the future is here,” Mr. McMaster said in prepared remarks on Wednesday. “And I applaud BMW on helping lead the way.”

Lindsey Graham sits to the right of Henry McMaster and Oliver Zipse.
Senator Lindsey Graham, left, with Gov. Henry McMaster and Oliver Zipse, the chief executive of BMW, at the company’s plant in Spartanburg on Wednesday.Juan Diego Reyes for The New York Times

The state’s senior senator, Lindsey Graham, who also attended the event, has strongly criticized the Inflation Reduction Act, accusing Democrats of “turning the economy upside down and increasing taxes all in the name of climate change.” He said on Wednesday that, if Republicans won control of Congress, he would hold hearings on where battery raw materials come from and how the shift to electric vehicles is affecting automakers, Reuters reported.

South Carolina is one of 17 states that have sued to stop the E.P.A. from allowing California to set more stringent standards for greenhouse gas emissions by cars and pickup trucks. In October, Representatives Ralph Norman and William Timmons, whose districts include parts of Spartanburg County, joined other Republicans in calling on Mr. Biden to block California’s plan to end sales of gasoline cars by 2035.

Buyers of cars made at the factory, unlike people who buy electric vehicles imported from Germany, are more likely to qualify for federal incentives worth up to $7,500 under the climate bill.

“States whose legislators are least likely to support those consumer purchasing benefits may well be the ones who get the most benefits,” said Barry Rabe, a professor of political science at the University of Michigan who studies energy and climate politics.

It’s not surprising, Mr. Rabe said, that when a new factory opens “everybody shows up and tries to claim credit.”

Oliver Zipse, the chief executive of BMW, said South Carolina political leaders had been very supportive of electric vehicle production, whatever their views on climate change. Mr. Zipse also has problems with the Inflation Reduction Act, but for different reasons. He said the law made it too difficult for carmakers to qualify for subsidies.

In particular, Mr. Zipse said by phone from Spartanburg on Wednesday, it’s impossible for carmakers to meet requirements that raw materials for batteries come from America or its trade allies.

“There are some substantial flaws,” Mr. Zipse said. “No car manufacturer is profiting from it.”

Battery packs for hybrid electric vehicles being built on site at BMW.
Juan Diego Reyes for The New York Times
Assembling battery packs for hybrid electric vehicles.
Juan Diego Reyes for The New York Times

All automakers are spending billions to survive the biggest technological upheaval to hit the industry in a century. Michigan and other Midwestern states, which send a fair number of Democrats to Congress, will get some of the money, but many of the biggest projects are in the South where Republicans dominate.

Other examples include a $5.6 billion electric vehicle and battery manufacturing complex that Ford Motor is building north of Memphis; a new Tesla factory in Austin, Texas; and a Hyundai electric vehicle plant in Bryan County, Ga. Envision AESC, BMW’s battery supplier, will build a factory in South Carolina to supply the Spartanburg plant.

These projects were in the works before the Inflation Reduction Act, which also includes subsidies designed to encourage solar, wind and hydrogen projects. But the legislation will greatly accelerate such investments, said Mark Hutchinson, chief executive of Fortescue Future Industries, an Australian company that plans to build plants that will generate hydrogen using wind, solar or water power.

As the company scouts for locations in states like Texas and West Virginia, he said, it is getting a warm reception from politicians of all stripes. “A lot of states are going to be very keen to have this, whether Republican or Democrat,” he said. “Business is business.”

In August, Mercedes-Benz began producing the EQS electric sport utility vehicle near Tuscaloosa, Ala., with battery packs assembled at a new factory in nearby Woodstock.

The road to the factory from Birmingham leads past a tableau of the rural South: clusters of weathered trailer homes, a large Baptist church, a drag strip and a barbecue joint called Promiseland.

Alabama, Kentucky and South Carolina are near the bottom of national rankings in electric vehicle sales. But that apparent preference for gas-burning vehicles did not prevent elected officials, including Gov. Kay Ivey of Alabama, from turning out in March when Mercedes inaugurated the vast new $1 billion battery plant.

The factory is “one of the best things” that has ever happened to the area, said James Kelly, a member of the local county commission.

A worker with their back turned operates large orange machinery inside the Mercedes Benz factory.
The Mercedes-Benz battery factory in Woodstock, Ala.David Walter Banks for The New York Times

Officials were more restrained when talking about the environmental benefits of electric cars. Mike Oakley, the mayor of Centreville, a nearby town, said the factory was “a chance to get ahead of a technology that’s going to lead the world.” But climate change is “not a big concern,” he said.

Mercedes executives have urged the state to do more to promote electric cars.

“Our team has worked very closely with the state to talk about how do we see the market developing and what needs to happen,” Ola Källenius, the chief executive of Mercedes-Benz, said in an interview in Alabama in March.

In response, Ms. Ivey’s administration has begun an advertising campaign, “Drive Electric Alabama,” to encourage electric car purchases. Alabama has also announced plans to install charging stations along major highways.

The ad campaign stresses the fuel savings from electric cars, and the convenience of charging at home, rather than the environmental benefits.

In Tennessee, Volkswagen has pushed officials to do more to promote solar and other forms of renewable energy, so that electric vehicles are running on clean energy, Pablo Di Si, the president of Volkswagen of America, said in an interview on Wednesday. The German carmaker began producing the battery-powered ID.4 S.U.V. at a plant in Chattanooga in July.

“The energy source is a key piece in this conversation,” Mr. Di Si said, adding that Tennessee officials have been receptive.

A vehicle is revealed behind two large doors at a Volkswagen facility.
Volkswagen opened the new high-voltage test center called Battery Engineering Lab in June, adjacent to the company’s Chattanooga Assembly Plant.Todd Kirkland/Associated Press

In Kentucky, which is represented in the Senate by Mitch McConnell, the minority leader who led opposition to the Inflation Reduction Act, battery factories will soon employ more people than the coal industry, traditionally a pillar of the state’s economy and identity.

Ford, working with SK Innovation, a South Korean company, is spending $5.8 billion to build a battery plant in Glendale, Ky. Envision AESC, which is based in Japan, will invest $2 billion in a battery factory in Bowling Green.

Gov. Andy Beshear of Kentucky, a Democrat, said he was thrilled about the 7,000-plus jobs that battery companies would create in Kentucky. But, in an apparent nod to political realities, he said he also supported the coal industry.

“We have to have a diversified energy portfolio where we advance green energy to take care of the planet, but also know that when we flip that light switch, it has to be able to come on even in difficult times,” Mr. Beshear said in an interview.

Support for green technology from conservative climate change skeptics may not be as incongruous as it seems, said John G. Geer, a professor of political science at Vanderbilt University in Nashville.

“The one unifying principle the political parties will always converge on is more jobs,” Mr. Geer said.

Republicans are firmly opposed to Mr. Biden’s climate program, but have no objection to private investment, he said, especially when it’s from the auto industry. Southern states have been trying to attract car companies for decades, with considerable success.

Just as the presence of the oil industry has shaped attitudes about climate change in states like Texas and Louisiana, billions of dollars in electric vehicle investment could change attitudes toward climate change, Mr. Geer said.

He said the influx of new workers to the new auto and battery factories from elsewhere could even change which political party some parts of the South favored, although “that’s not going to happen anytime soon.”