German automaker Volkswagen is set to receive $1.3 billion in state aid under an economic development deal signed by South Carolina Gov. Henry McMaster on Monday, backing the construction of a new electric-vehicle production plant 20 miles north of the capital, Columbia.

The $2 billion planned factory will produce electric vehicles under the Scout nameplate, acquired by Volkswagen in 2020, reviving a brand of pickups and SUVslast produced in 1980.

“The fascinating part is the vision of Scout Volkswagen, as expressed by Scout, and the vision of the people of South Carolina that have matched so perfectly to make this day come so quickly,” McMaster said at a press conference outside the state Senate building.

McMaster said negotiations were ongoing for months on the package which passed the state House on a 96-12 vote March 9 and the Senate 36-12 on March 14, meeting limited resistance from the state legislature’s conservative Freedom Caucus.

Volkswagen hopes Scout’s all-electric SUV will prove popular in the U.S. market, where demand for alternative-fueled vehicles has been buoyed by state and federal production and sales incentives.

The company hopes to break ground on a three-year construction phase later this year and will benefit from the largest economic incentive package in South Carolina’s history as it does.

The plan bankrolls a wide array of projects to turn a 1,100-acre site in rural Blythewood, a town 20 miles north of Columbia, into a production plant capable of churning out 200,000 vehicles a year.

The factory has the potential to employ 4,000 people when in full swing, according to officials.

South Carolina’s Department of Commerce will be responsible for distributing most of the allocated funds, $1.2 billion of which will be drawn from the state’s contingency reserve fund and $86.2 million from fiscal 2023 surplus revenue.

Volkswagen announced in May 2022 that it will revive the Scout brand to sell electric SUVs and pickup trucks.

The company announced on March 3 it had selected South Carolina and the 5,300-person town of Blythewood in Richland County for its new factory, in part due to its location and extensive transportation networks.

“Bordered by I-77 and Blythewood Road, its strategic location is less than 20 miles north of Columbia and near major cities and talent hubs such as Charleston, Charlotte, Greenville, and Atlanta,” Volkswagen said in a release. “This proximity gives Scout unrivaled access to major highways, ports of Charleston and Savannah, and universities focused on automotive engineering. “

In addition to projects directly related to the site, McMaster’s plan directs funding toward improving the infrastructure systems in and around the factory, including roadways, bridges, local rail lines, and water and waste infrastructure.

The Scout deal marks the third major economic development agreement pursued by Richland County officials this year. Local lawmakers announced a $323 million deal for a processing facility for lithium-ion battery producer Cirba Solutions in Richland in January and, in February said they were finalizing the terms on an $800 million incentive package for a solar panel production plant also to be located in Blythewood.

Volkswagen joins several other large automakers in tapping South Carolina and the wider Southeast, to build out production capacity for electric vehicles.

McMaster has made luring electric vehicle companies to the state a priority of his administration; last October, he signed an executive order that supported the development of the state’s electric vehicle production infrastructure and active recruitment of interested companies.

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