Scout Motors Was Never Good For South Carolina – And It’s Getting Worse

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by TONY J. SPAIN

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In May 2022, Scout Motors, a newly launched subsidy of Volkswagen, announced plans to bring back the iconic International Harvester Scout and another truck model as electric vehicles to be built in the U.S. at an unannounced location with plans for production to begin in 2026. That’s code for we just need a sucker partner to go into business with.

In March 2023, the German automaker found their sucker, the State of South Carolina. Scout announced they would invest $2 billion and build a state-of-the art manufacturing facility on 1,100 acres in Blythewood, S.C. that would create 4,000 permanent jobs and produce 200,000 vehicles a year, or roughly 40 vehicles every hour.

South Carolina had to compete with other states for the project, Scout Motors looked at 74 sites around the country before picking Blythewood for its first-ever manufacturing plant. Scout Motors CEO Scott Keogh said the company had chosen South Carolina because of its preparedness and readiness to act.

“What made it work without a doubt was the state was ready to go,” Keogh told The (Columbia, S.C.) State newspaper. “The bell rang, and they were sprinting.”

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And boy were they sprinting! The state legislator rammed a $1.3 billion deal in incentives – that included $400 million in cash for site preparation – through the legislature in a week and had it on Governor Henry McMaster‘s desk for signature.

According to a report acquired by the Palmetto Examiner regarding an investigation initiated by a complaint to the S.C. State Ethics Commission (SCSEC), there were allegations of illegal lobbying related to the incentive package awarded to Scout Motors. The report showed the deal was approximately $300 million to $500 million higher than what other states typically provide for comparable projects. The investigation did not uncover any evidence of misconduct or criminal activity; however, it provided valuable insight into the desires of lawmakers to cut back room deals that occurred behind closed doors out of the public view. 

Even Richland County offered up their own incentive plan worth more than an estimated $4 million dollars which included a 40-year tax abatement through a Fee-in Lieu-of-Tax agreement allows for Scout Motors’ property to be assessed at a tax rate of 4%. That’s 6.5% less than the typical 10.5% rate manufacturing property is assessed at in South Carolina. Scout also will get a 50% tax break through making investments in infrastructure, a set up known as an infrastructure tax credit.

Along with tax breaks, Richland County, the town of Blythewood and the city of Columbia agreed to upgrades to a Blythewood Fire Station, childcare support for eligible Scout employees, including stipends and access to an onsite childcare facility. And contributions to infrastructure improvements such as road widening and more.

In comparison to other states handing out corporate welfare to electric vehicle manufacturing, Georgia is putting up $1.8 billion in incentives to attract Hyundai. North Carolina is spending $1.2 billion for car manufacture VinFast, and Kentucky and Tennessee provided $1 billion for a new Ford plant for electric vehicles and batteries.

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“These are the types of numbers in this very competitive world that the states are investing because they know these facilities are going to be here for the long term, and they’re going to provide tremendous positive economic impact,” S.C. Department of Commerce (SCDOC) secretary Harry Lightsey said during a press briefing in March 2023.

SCDOC has also been working to sell the deal to the public with the promise of economic boom and jobs. In the same press briefing Lightsey said the project was expected to generate $15 billion worth of economic impact by 2029, referencing a study done by the University of South Carolina economist Joey Von Nessen.

“So we’ll already have a return on that investment as the governor said, and that’s within three years of when they start their production,” Lightsey said.

But not everyone agrees with the optimistic outlook. Greg Leroy, founder and director of Good Jobs First, a policy group that researches economic development subsidies, says as billion-dollar incentive deals for electric vehicles continue to pile up, states won’t be able to recoup the money they put in up front calling the deals in Georgia and North Carolina “terrible precedents” for future electric vehicle manufacturing subsidies.

In South Carolina’s case, Leroy said spending $1.2 billion in exchange for 4,000 jobs isn’t good value.

“At that price, South Carolina taxpayers can never break even,” Leroy said.

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And those statements were made in 2023, when federal legislation was highly favorable and supportive of the expanding world of electric vehicles with government tax breaks.

In 2022, then President Joe Biden signed the ‘Inflation Reduction Act‘ into law. One of its provisions, a “clean vehicle credit” awarded up to $7,500 for purchasing a new electric vehicle. The program was set to last until the end of 2032, but President Donald Trump, signed into law the ‘One Big Beautiful Bill Act‘ in July which ended the credit on September 30, 2025.

As a result, sales of electric vehicles skyrocketed in August and September as people interested in them rushed to beat the tax credit deadline but then plummeted once the credit expired.

Electric vehicle sales plunged 74% in October after the expiration of the federal tax credit marking one of the sharpest short-term declines in the market’s recent history and for the first time in a decade, electric vehicle registrations have fallen in 2025.

Also under the Biden administration, the Environmental Protection Agency (EPA) adopted emissions rules that would effectively require more than half of all new vehicles produced by 2032 to be electric, but the agency rescinded those rules last month after the return of President Donald Trump.

That’s probably bad news for companies like Scout Motors and raises the question, Is the buzz around American electrical vehicle market just a creation of government policy?

The writing was on the wall for General Motors who holds the largest inventory of electric vehicles in the U.S. Wall Street Journal reporter Sharon Terlep reported in October 2025 that General Motors was booking a $1.6 billion charge on their electric car business and reducing their manufacturing capacity of electric vehicles as demand sinks.

“In a regulatory filing, the company said that EV sales are expected to fall with the end of government-funded subsidies and regulatory mandates that fueled EV growth,” according to the report. 

That’s a monumental 180-degree spin within just a few years. As early as 2021, General Motors CEO Mary Barra announced the car manufacture was phasing out all gas-burning vehicles by 2035. That’s a 180-degree shift within just a few years.

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Ford also announced in August 2024, they were shifting away from electric vehicles after its electric vehicle division had lost $12 billion in two years according to the New York Times.

“The demise of the tax credit will probably bring the party to an end,” Neal E. Boudette, veteran auto industry reporter, wrote in the New York Times, September 25, 2025. “Sales of electric models are expected to plummet in the last three months of the year and then remain sluggish for some time.”

As mentioned, Scout Motors estimates that the new factory will be capable of building up to 200,000 vehicles annually, or roughly 40 vehicles every hour, but now the question is whether there will even be a demand for the product output once production, that is now behind schedule, actually begins?

Scout Motors had hoped to begin production this year, but has yet to build a single vehicle. They had previously pushed production back saying they hoped to begin 2027, but an article written this month by Alexander Demling in Germany’s Der Spiegel now says production has been pushed back deep into 2028 due to technical issues. Also, the project is more than $150 million over budget. 

“If the General Assembly does not agree to pony up the additional cash in the next state budget, the state Commerce Department would have to tell contractors working on the site that it doesn’t have the money to pay them,” Jessica Holdman of the South Carolina Daily Gazette wrote last month. “And we would not have the money to pay them for several years under our regular funding,” Harry Lightsey, South Carolina’s economic development chief, told legislators.

Holdman also noted that in the original deal, the state and county governments “agreed to contract and pay for all of the mass grading work at no cost to the company” as well as “the cost of all associated environmental requirements.

The environmental requirements that included wetland mitigation and a $3 million dollar fine to Richland County have accounted for nearly half of the budget overrun.

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Cost overruns are not unusual on projects of this magnitude, but those costs should be for the companies to bear, not taxpayers, that’s part of the gamble of doing business. South Carolina officials apparently negotiated that away and decided taxpayers would assume that risk.

Scout Motors should take a loan, look for other investors or use cash reserves. Small businesses rarely, if ever, get this kind of treatment, they just help foot the bill along with taxpayers.

And it’s not like Scout Motors didn’t have the resources available to absorb the extra cost. Parent company Volkswagen reported more than $47.6 billion in cash on hand in their 2024 Annual Report.

This news comes right after Scout Motors snubbed South Carolina for Charlotte, N.C., to locate their corporate headquarters and 1,200 high-paying white-collar jobs. One has to wonder why the details of the headquarters weren’t guaranteed and negotiated in the massive billion-dollar deal to begin with.

When Scout Motors first announced its South Carolina factory, they had more reasons to be optimistic; given the dip in EV sales, it may have to scale back its ambitions. If that happens, it’s not just Scout Motors and Volkswagen who will be on the hook, but the South Carolina taxpayer and small businesses, who have been on the hook all along in this bad deal.

Scout Motors found their sucker. This was never a good deal for South Carolina’s small businesses and taxpayers – who will be left with the cost of holding the bag.

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ABOUT THE AUTHOR…

Tony Spain is a former candidate for Richland County Council 2020 and an award winning former military photographer and journalist while in the Public Affairs Office for the U.S. Army. His photos and writing have been published in numerous publications such as The Commercial News, Danville, Ill.; The Paraglide, Fort Bragg, N.C.; Soldier of Fortune Magazine; The State Newspaper, Columbia, S.C., FITSNews and more. He lives in Columbia, S.C.

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