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States battling over massive economic development projects like Micron: What’s the cost?

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  • Staff Report 

States across the US are offering more incentives than ever to attract multibillion-dollar microchip, electric vehicle (EV), and battery factories, reflecting the surge in large new projects. Georgia, Kansas, Michigan, New York, North Carolina, Ohio, and Texas are among the states that have pledged billions of dollars to attract such plants. State-subsidized plants by profitable automakers and semiconductor giants are expected to be announced soon.


Despite warnings from academics that such subsidies are a waste of money and rarely decisive in a company’s choice of location, states continue to compete with each other to outdo each other. They are offering ever-higher subsidies, including grants, low-interest loans, municipal road improvements, and breaks on taxes, real estate, power, and water. The number of big projects and the size of state subsidy packages are extraordinary, with last year setting a record for the number of billion-dollar-plus incentive deals.

As the automotive and semiconductor industries undergo transformative changes, with automakers investing heavily in electrification and chipmakers expanding production in the US following pandemic-related supply chain disruptions, federal subsidies signed into law last summer to encourage companies to produce EVs, EV batteries, and computer chips domestically, and states flush with cash thanks to inflation-juiced tax collections and federal pandemic relief subsidies are driving the trend.