Despite State Incentive Push, Electric Vehicle Manufacturing Slow to Spread in Illinois

The Reimagining Electric Vehicles Act, or REV Act, was supposed to be huge for Illinois.

When Gov. J.B. Pritzker signed it into law in November 2021, the acting director of the Department of Commerce and Economic Opportunity Sylvia Garcia called it a “gamechanger” and sponsoring state Rep. Dave Vella, D-Rockford, said it “could turn Illinois into the Silicon Valley of electric vehicle manufacturing.”

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“With this bill, we intend to attract more EV manufacturers, charging station manufacturers and automotive parts manufacturers. More than ever before. And it will help Illinois become one of the leading EV hubs in the entire nation,” Pritzker said at the bill signing ceremony.

But so far the package, which gives tax credits to incentivize electric vehicle and parts production and training, has yielded few results, to the point that Pritzker is expected to soon sign legislation that will expand REV’s tax credits.

The Pritzker administration is also eying other tax credit proposals, like bulking up the state’s major tax credit program, the Economic Development for a Growing Economy, or EDGE program, and creating a closing fund the governor could use at his discretion to cinch a deal. 

Auto manufacturing is a large part of the state’s manufacturing base.

“We have hundreds, if not thousands, of suppliers in the state of Illinois that support tens of thousands of jobs. As our economy is changing and becoming more electrified, we’re seeing that with manufacturers as well,” said Illinois Manufacturers’ Association President Mark Denzler said.

Rivian’s Bloomington-Normal plant makes electric trucks and Amazon delivery vans. Lion Electric in Joliet makes school buses. Weigel Tool Works makes bus bars for vehicles, he said.

“What you’re seeing are companies in Illinois, suppliers in particular, that are adjusting or adapting to making sure that they can produce those component parts for the electric vehicles,” Denzler said.

But so far, only one deal has been inked under REV, with T/CCI in Decatur.

“They make compresses that go into electric school buses and large trucks, and they have a great program whereby they partner with the University of Illinois and Northern Illinois University and Richland Community College,” Denzler said. “Richland Community College is going to have a training academy inside T/CCI.”

Denzler said that training will give Illinois an advantage, because one of the great challenges for manufacturers shifting into the EV space is finding employees capable of the work.

Building an electric vehicle is a lot different than building an internal combustion engine, Denzler said. On that front, he said Illinois has other advantages, with the University of Illinois’ engineering program, plus Argonne and Fermilab.

Illinois offers other perks too, he says: Access to water, and a central location from which to ship product.

Still, per media reports, since REV was passed, Illinois has lost more than a dozen EV battery production plants, and other opportunities that decided to build elsewhere.

“We’ve certainly lost some plants to other states, where they’ve chosen to locate in another state. They have not closed down in Illinois,” Denzler said. “But certainly there are challenges we have here … things like property taxes and workers compensation.”

Denzler said when it comes to electric vehicles, companies are making decisions quickly.

He's hoping the revised REV Act, approved by legislators during their recent veto session will help Illinois to jump on those opportunities.

During its recent veto session, legislators recharged the REV, making changes like increasing an incentive to retain current employees, and allowing companies that do some, rather than exclusively, EV work to qualify.

Denzler said  Illinois has to keep up with other states upping their incentives.

“All of the auto manufacturers are moving in this direction, whether you’re Ford or G.M. or Stellantis or BMW, you name it.  So they’re all making these decisions right now about where they’re going to build electric vehicles, or where they’re going to ship them from and who their suppliers are,” he said. “They’re all making these decisions at the same time, and so we’re working with a number of companies – auto manufacturers, battery manufacturers. But they’re also working with other states. So this really is a chase.”

But last week, Stellantis announced that at the end of February it will idle its plant in Belvidere, near Rockford, that currently assembles Jeeps.

“Our industry has been adversely affected by a multitude of factors like the ongoing COVID-19 pandemic and the global microchip shortage, but the most impactful challenge is the increasing cost related to the electrification of the automotive market," the company said in a statement.

Stellantis says that means workers will be laid off.

Still, the company says the plant is not closing but is “working to identify other opportunities to repurpose the Belvidere facility and has no additional details to share at this time.”

The hope is that Stellantis will repurpose the plant into one that makes electric vehicles; the changes to the REV Act could be an incentive.

The governor has yet to sign the redone REV Act into law. But already, there's talk of additional changes.

“This is a race and we’re seeing other states continue to change their packages as well, and we have to do it here to remain competitive,” Denzler said.

He said currently, companies must invest $20 million in capital to qualify for the REV EDGE tax credit, an amount that may be insurmountable for smaller companies. He said reducing that threshold could attract more small suppliers to Illinois.

Denzler said Illinois could also further up its incentive to retain jobs.

“Everyone’s going after new jobs, but we have to certainly protect the base of what we have here today,” Denzler said. “If a company is leaving Illinois, they’re probably going to get much more credit for a new job in another state, while here they’re being retained.” 

In a statement, the governor's office said the administration is working with the business community to update EDGE to “reduce red tape” and to attract more jobs.

Pritzker also wants a closing fund, or a pot of money at his disposal to push through deals.

As his office put it in a statement: “A closing fund would make Illinois more competitive in efforts to recruit new business investments in Illinois and would allow us to compete with our neighbors in the Midwest that have closing funds available.”

Legislators could move on the new tax incentives in January, during the lame duck session.

Follow Amanda Vinicky on Twitter: @AmandaVinicky

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