Some manufacturers are scaling back electric vehicle production. Should SC be concerned?

COLUMBIA, S.C. (WIS) — As recently as this week, some car manufacturers have announced they plan to scale back production of electric vehicles and lay off workers, with demand less than what they expected.

According to Automotive News, Ford is cutting production of its F-150 Lightning trucks in half, while GM is postponing production of some of its EVs, according to The New York Times.

The automobile industry is South Carolina’s largest manufacturing sector, employing 75,000 workers.

But this key player in the state’s economy is also undergoing its most significant transition in a long time.

“That’s critically important as they make a pivot from the internal combustion engine to the electric vehicle, that we be a part of that,” South Carolina Secretary of Commerce Harry Lightsey said.

In the last 14 months, South Carolina has proceeded full-speed-ahead with that strategy.

In October 2022, Gov. Henry McMaster signed an executive order that prioritizes the recruitment of electric-vehicle manufacturers and suppliers to South Carolina.

Since then, the state has announced companies in this industry plan to create over 8,000 jobs and invest more than $10 billion into South Carolina operations.

Among those announcements in the last 14 months, dollars and jobs are targeted across all regions of the state, with EV production plants in the Upstate and Midlands at BMW in Spartanburg County and Scout Motors in Richland County, respectively; EV battery component recycling and production in the Lowcountry at Redwood Materials in Berkeley County; and battery production in the Pee Dee to support BMW at AESC in Florence County.

Just this week, AESC announced it is doubling its economic investment at its under-construction facility and adding 450 more jobs, bringing its total to more than 1,600 jobs and $1.6 billion in investment.

The day after the AESC news, e-VAC announced will build a magnet-production plant in Sumter County for electric vehicles and defense projects, a half-billion-dollar investment yielding 300 jobs.

Typically with these announcements, the state also has skin in the game, offering tax credits based on factors like job creation and millions of dollars in grants to offset costs, including infrastructure and site improvements.

“Those kind of investments don’t get made unless an irreversible trend is being established,” Lightsey said.

So Lightsey said he is not concerned about those recent reductions in electric vehicle production for some manufacturers outside South Carolina.

“This transition will occur very gradually, over decades, and so we’ve got a foot in that future,” he said.

University of South Carolina Research Economist Joey Von Nessen said transitioning this industry toward EV production is going to become increasingly important for the state in the coming years.

“We have to think not just of the US market but the global market, and the demand for EVs continues to rise across the world, including in China and in Europe and, to a lesser extent, in the United States,” Von Nessen said.

He agrees with Lightsey that the scaling-back in EV production is not a cause for concern for South Carolina at this point.

“This is a broader readjustment in the economy because, remember, as interest rates rise, that makes the cost of borrowing money go up for consumers and makes big-ticket items more expensive, and EVs are a luxury good,” he said.

But Von Nessen believes long-term projections for electric vehicles to be a significant part of the automotive industry remain on track.

“It’s just the pace of that expansion that’s really uncertain,” he said.

The thousands of new jobs in the EV industry across South Carolina are expected to open as the state is already facing a worker shortage across all industries.

Von Nessen said that will require the state to do more of what it already does well, which is training workers to meet employers’ demands.

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