'WAR OF THE STATES': EV, CHIP MAKERS LAVISHED WITH SUBSIDIES

States are doling out more cash than ever to lure multibillion-dollar microchip, electric vehicle and battery factories, inspiring evermore competition as they dig deeper into their pockets to attract big employers and capitalize on a wave of huge new projects.

Georgia, Kansas, Michigan, New York, North Carolina, Ohio and Texas have made billion-dollar pledges for a microchip or EV plant, with more state-subsidized plant announcements by profitable automakers and semiconductor giants surely to come.

States have long competed for big employers. But now they are floating more billion-dollar offers and offering record-high subsidies, lavishing companies with grants and low-interest loans, municipal road improvements, and breaks on taxes, real estate, power and water.

“We’re in the second war of the states,” said John Boyd, a principal at the Florida-based Boyd Company, which advises on-site selections. “That’s how competitive economic development is between the states in 2023.”

The projects come at a transformative time for the industries, with automakers investing heavily in electrification and chipmakers expanding production in the U.S. following pandemic-related supply chain disruptions that raised economic and national security concerns.

One of the driving forces behind them are federal subsidies signed into law last summer that are meant to encourage companies to produce electric vehicles, EV batteries, and computer chips domestically. Another is that states are flush with cash thanks to inflation-juiced tax collections and federal pandemic relief subsidies.

The number of big projects and the size of state subsidy packages are extraordinary, said Nathan Jensen, a University of Texas professor who researches government economic development strategies.

“It is kind of a Wild West moment,” Jensen said. “It’s wild money and every state seems to be in on it.”