South Carolina’s EV Corporate Cronyism Carries Big Risks

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by DIANE HARDY

South Carolina was recently mentioned in a national article by Daniel Horowitz entitled “Red State Republicans embrace the Green New Deal.” In his article, Horowitz calls out two governors and their respective states: “South Carolina Gov. Henry McMaster and Georgia Gov. Brian Kemp have turned their states into meccas for foreign companies building electric vehicle plants.” Of note is that during the fiscal year 2022-2023 companies announced more than $9.7 billion for EV investment across our state.

Horowitz believes this shows short-term thinking and creates fake jobs. He’s concerned that we are funding a massive transition from workable to unworkable energy which he believes is bad for red states – and bad for the environment.

“The green grift is a classic example of illusory job creation,” he wrote. “When you misallocate resources to subsidize projects the market would never sustain, you drive up prices and debt in the long run, causing a long-term loss of durable jobs.”

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We at The Mom and Pop Alliance of SC have voiced our concern about one economic development deal in particular.  We highlighted the way the $1.3 billion incentive package to VW/Scout for an EV plant in Blythewood passed the SC House within days of being introduced with virtually no citizen awareness or buy-in of the deal. It was especially frustrating to see it sail through the Senate in a matter of hours when issues that the citizens very much want – including tort reform and judicial reform – can take years and years before we see any headway. 

To be clear, I don’t have anything against EV’s personally (my husband drives a Tesla), but I don’t think they are a good workable option for most consumers, and I certainly don’t think South Carolina’s taxpayers should be on the hook for this potential boondoggle.

As a Detroit girl, I witnessed first-hand the risk of putting too much of a state’s economy into one basket. I lived through several booms and devastating busts that ravaged Detroit and then would reverberate throughout Michigan. My fear is, given how the EV industry is so heavily subsidized, we may see many more busts than booms.

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“What’s shocking is that even with so many tailwinds behind the EV industry, the subsidized players still cannot make their absurd, venture-socialist business model solvent – even with the support of consumers and taxpayers,” Horowitz wrote. “Ford is losing nearly $50,000 on each vehicle this year… Mercedes is experiencing a freefall in its EV fleet and Volkswagen is walking back its entire electric vehicle production strategy.” 

I genuinely believe that our governor and the lawmakers who support these economic development packages have the best of intentions. The allure of federal dollars from the ironically named Inflation Reduction Act is enticing, and of course they want good high-paying jobs for South Carolinians. They see this as the answer to revitalize economically depressed areas in our state with the hope that area small businesses will benefit from trickle-down economy these plants will create. After all, that was the case with BMW in the Upstate – but much has changed since that deal was hammered out in the early 1990s.

Unfortunately, in recent years far too many of these economic development deals go the way of the one South Carolina made with the Proterra EV bus company – which ended with the company eventually declaring bankruptcy.  

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These deals can hurt small businesses in a variety of ways. First, the incentives given have become so massive they create an uneven playing field, financially favoring large international corporations over smaller businesses. Maybe South Carolina should consider a more accelerated lowering of the state income tax rate for everyone over crony-capitalism-giveaways to international corporations.  

But I believe the greatest worry about South Carolina becoming a “mecca for foreign companies building electric vehicle plants” is how it will necessarily expand ESG (social credit scoring) in our state. It’s important to note that another term for ESG is “Sustainability Rating.”  While ESG/Sustainability ratings are strongly encouraged in the United States – and are often encouraged using a variety of big carrots and sticks – they are not the law here, at least not yet.

I’m not sure how many lawmakers were made aware that the European Union passed a law last January requiring ALL European companies (even those based in the United States) to obtain ESG compliance scores on every subsidiary to an EU company – regardless of size of the subsidiary. So that means every company that does business with an EU company, even businesses in the Palmetto State, must comply with this EU law to be able to do business with the large foreign company that we incentivized to be here.  

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RELATED | SOUTH CAROLINA’S ESG BATTLE: TOO EARLY TO POP THE CHAMPAGNE

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The Mom and Pop Alliance has written extensively about the potential fallout from these sustainability/ESG social credit scoring criteria born from the World Economic Forum, the United Nations, as well as other global entities. Keep in mind the word “sustainability” is very broad and ambiguous, appearing to intentionally lack a concrete, detailed definition and is usually wrapped in positive words like “conservation.” The scoring is largely based on promoting carbon neutrality, combatting climate change and furthering “climate justice,” but given the arbitrary nature of the scoring, it can also include racial justice, LGBTQ+ rights, the anti-gun agenda, DEI (diversity, equity and inclusion) and more.  

Clearly, not only would compliance with these metrics be onerous and burdensome for small businesses, but in my opinion, they risk permanently changing the very culture of the Palmetto State. Right now, SC’s “Sustainability Rating” is 37th in the nation. Bringing in more foreign companies that will enforce their ESG/Sustainability mandates throughout our state is a sure way to increase our Sustainability Rating and move us toward the top ten nationally.  But do we really want to get it in the top ten so we can be more like Minnesota, Washington, Oregon, Massachusetts and California? 

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ABOUT THE AUTHOR …

Diane Hardy is a former nurse anesthetist turned entrepreneur, who opened a franchise at Verdae in Greenville over seven years ago. She is executive director of the Mom and Pop Alliance of SC, which she founded during Covid upon discovering South Carolina’s almost 400,000 small businesses had little representation in our State House. The Alliance provides education, communication, and advocacy for SC’s family-owned businesses. Her passion for South Carolina’s small business is strong, and as such she donates her time to the organization, accepting no salary or government funding.  Her love for our state isn’t new.  Before launching the Mom and Pop Alliance she was the founder and host of The Palmetto Panel (2014-2019), an annual statewide conference highlighting issues impacting South Carolina.  Diane has a bachelor’s degree in nursing and psychology from Michigan State as well as a master’s degree from MUSC.

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