Georgia would offer a bounty of perks for Rivian project

RT1 trucks are assembled and tested, April 14, 2021, before the new Rivian plant fully opens in Normal, Illinois. The company is now in negotiations with Georgia to locate a plant in the state that some suggest could come with 8,000 jobs. (Brian Cassella/Chicago Tribune/TNS)
Caption
RT1 trucks are assembled and tested, April 14, 2021, before the new Rivian plant fully opens in Normal, Illinois. The company is now in negotiations with Georgia to locate a plant in the state that some suggest could come with 8,000 jobs. (Brian Cassella/Chicago Tribune/TNS)

Credit: TNS

If history is any guide, Georgia offered a mammoth incentive package to try to lure Rivian’s electric-vehicle manufacturing and battery plants. And a range of traditional and not so traditional perks could be involved.

The state is nearing a final deal to land the Rivian project, according to several people with direct knowledge of the negotiations, which would bring thousands of jobs to northeast Georgia and cement the state as a powerhouse in the emerging electric-vehicle industry.

Though the negotiations aren’t finalized yet — and officials are keeping publicly mum until they are — but landing such a competitive project is expected to take a bounty of incentives that won’t come into full display until after the deal is sealed.

There is already maneuvering, quiet and not so quiet, underway to help Rivian and the electric-vehicle industry plant roots in Georgia. Analysts expect the total package to be one of the most lucrative the state has ever offered, though still short of the $2 billion it dangled to try to lure Amazon’s second headquarters, a bid that was unsuccessful.

“The industry is very attractive for states like Georgia, and incentives would play an important role in underwriting costs for Rivian,” said John Boyd, a nationally known corporate site consultant. “It also suggests goodwill to other companies, that Georgia is ready, willing and able to be a partner in electric vehicle production.”

All those perks, however, come with a price. Some economists warn that offering a generous package could exact a long-term toll on a community that isn’t always worth the upfront expense.

“There is always a danger to giving out incentives because most of the time they are not important in affecting relocation decisions,” said J.C. Bradbury, a Kennesaw State University economist with an expertise in tax incentives. “Communities end up losing more from the subsidies they give out than the returns gained from economic activity.”

Innovative perks

Georgia’s last big victory on the automotive front came in 2006, when state and local tax breaks helped woo Kia to put a plant in West Point, about 75 miles southwest of Atlanta.

But later efforts to win an automotive plant ended in heartbreak, most notably the 2015 pursuit of a Volvo factory. Then-Gov. Nathan Deal persuaded legislators to make it easier for state agencies to buy Georgia-made cars and overhauled an environmental agency to clear the way for the project.

Caption
In this photo provided by the Georgia Port Authority, Georgia Gov. Brian Kemp announces that the Georgia Ports Authority has now commissioned all 18 working tracks at its Mason Mega Rail Terminal at the GPA's Port of Savannah Garden City Terminal, Friday, Nov. 12, 2021, in Savannah, Ga. (Stephen Morton/Georgia Port Authority via AP)

Credit: Stephen B. Morton

In this photo provided by the Georgia Port Authority, Georgia Gov. Brian Kemp announces that the Georgia Ports Authority has now commissioned all 18 working tracks at its Mason Mega Rail Terminal at the GPA's Port of Savannah Garden City Terminal, Friday, Nov. 12, 2021, in Savannah, Ga. (Stephen Morton/Georgia Port Authority via AP)
Caption
In this photo provided by the Georgia Port Authority, Georgia Gov. Brian Kemp announces that the Georgia Ports Authority has now commissioned all 18 working tracks at its Mason Mega Rail Terminal at the GPA's Port of Savannah Garden City Terminal, Friday, Nov. 12, 2021, in Savannah, Ga. (Stephen Morton/Georgia Port Authority via AP)

Credit: Stephen B. Morton

Credit: Stephen B. Morton

Volvo ultimately chose South Carolina, in part because of promises of expensive infrastructure improvements and encouraging reports from executives of a nearby BMW plant.

A more recent glimpse would be the $300 million in grants, tax breaks and free land offered to SK Innovation to build a massive electric vehicle battery plant in Commerce. That package could grow substantially as sales tax breaks and credits for research and development accumulate over the years.

The courtship of Rivian — whose investors include Cox Enterprises, the parent company of The Atlanta Journal-Constitution — will certainly include a recently altered “mega tax credit” program valued at $5,250 per job annually for five years for companies that hire at least 1,800 employees and have either a minimum payroll of $150 million or invest $450 million.

Caption
The deal Georgia has presented to Rivian to land its electric-vehicle manufacturing and battery plants will probably fall short of the $2 billion the state offered in its unsuccessful attempt to land Amazon's second headquarters.

The deal Georgia has presented to Rivian to land its electric-vehicle manufacturing and battery plants will probably fall short of the $2 billion the state offered in its unsuccessful attempt to land Amazon's second headquarters.
Caption
The deal Georgia has presented to Rivian to land its electric-vehicle manufacturing and battery plants will probably fall short of the $2 billion the state offered in its unsuccessful attempt to land Amazon's second headquarters.

Those credits were long capped at 4,500 new jobs, but earlier this year legislators removed that limit as part of a broader overhaul of tax credit law. Such a credit could be worth more than $90 million additionally Rivian if it hires 8,000 staffers, as some officials have suggested.

Beyond the promise of local incentives, infrastructure improvements and workforce training programs, other unconventional enticements could be underway. To entice Amazon, for instance, Georgia officials proposed an on-site state-financed academy, exclusive lounges at Hartsfield-Jackson International Airport and a special MARTA car.

‘A thorny issue’

It’s not yet clear how inventive the state’s package for Rivian will be. But at a Georgia House hearing Tuesday, one potential factor drew increased attention.

Lobbyists for electric cars renewed their push for lawmakers to let them sell their vehicles directly to Georgia customers, despite opposition from politically powerful auto dealers who want to keep the current structure in place.

The legislation that would allow the electric car companies to sell locally without going through a franchise dealer — House Bill 460 — was quickly blocked during the regular 2021 General Assembly session, but it could have new momentum in 2022 if Rivian decides to build its second plant in Georgia.

Even with support from the state’s power players, it won’t be an easy sell. Car dealers — many of whom sell less-expensive electric vehicles made by large manufacturers — fear allowing builders to peddle their vehicles directly to consumers would cost dealerships thousands of jobs.

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State Rep. Dominic LaRiccia opposes legislation that would allow electric-vehicle companies to sell directly to Georgia customers and bypass dealerships. “These dealerships have been the backbone of the automobile industry for decades,” said LaRiccia, a Douglas Republican. (Bob Andres/Atlanta Journal-Constitution via AP, File)

Credit: Bob Andres

State Rep. Dominic LaRiccia opposes legislation that would allow electric-vehicle companies to sell directly to Georgia customers and bypass dealerships. “These dealerships have been the backbone of the automobile industry for decades,” said LaRiccia, a Douglas Republican. (Bob Andres/Atlanta Journal-Constitution via AP, File)
Caption
State Rep. Dominic LaRiccia opposes legislation that would allow electric-vehicle companies to sell directly to Georgia customers and bypass dealerships. “These dealerships have been the backbone of the automobile industry for decades,” said LaRiccia, a Douglas Republican. (Bob Andres/Atlanta Journal-Constitution via AP, File)

Credit: Bob Andres

Credit: Bob Andres

“These dealerships have been the backbone of the automobile industry for decades,” said state Rep. Dominic LaRiccia, a Douglas Republican and a former Kemp floor leader.

“Georgia’s franchise dealer model is enshrined in state law to serve consumers, keep dollars local and preserve competition,” said Lea Kirschner, CEO, Georgia Automobile Dealers Association. “It shouldn’t be changed for out-of-state companies seeking an unfair entry into the Georgia new vehicle market, even if they choose to build a manufacturing facility in the state.

“If Rivian – or any other vehicle manufacturer, for that matter – wants to sell its vehicles in Georgia, there is a step that is much simpler than changing Georgia law: just appoint a dealer and allow that dealer to do the rest.”

Tesla put on a full-court press in 2015 to get lawmakers to approve letting it sell its cars without going through local car dealers. But the lobby for traditional Georgia auto dealers insisted Tesla be limited to five locations statewide. And the law was limited to Tesla, no other company.

Though the potential auto plant project was never mentioned in Tuesday’s meeting, Rivian executives are closely watching the issue, industry officials say.

So is Daniel Witt, a lobbyist for California-based Lucid Motors, an electric-car maker that wants to expand its infrastructure in Georgia but said the state’s current model of selling vehicles through dealerships “doesn’t work for us today.”

“It’s a thorny issue that deserves to be addressed in full,” he told the committee Tuesday.

Staff writer J. Scott Trubey contributed to this article.