Scout Motors' South Carolina EV Plant Hits $150M Overrun, Taxpayers Asked to Cover Costs
COLUMBIA, S.C. — A landmark economic development deal that promised to bring a next-generation electric vehicle plant to South Carolina is facing mounting financial pressure, with state officials now seeking additional taxpayer funds to cover a $150 million budget overrun.
In March 2023, Scout Motors—a Volkswagen Group subsidiary launched to revive the classic Scout off-road brand as an electric truck and SUV maker—announced plans for a $2 billion manufacturing facility in Blythewood. The state, eager to secure the project, approved an incentive package worth approximately $1.29 billion, including $400 million for site preparation.
"South Carolina was ready to go," Scout CEO Scott Keogh said at the time.
Yet, with production not slated to begin until 2027, the project's public costs are already swelling. According to state documents and reports from the South Carolina Daily Gazette, over half of the $150 million shortfall stems from wetland mitigation requirements—environmental commitments the state agreed to fund under the original deal.
"The state and county governments agreed to contract and pay for all mass grading work and associated environmental requirements at no cost to the company," noted reporter Jessica Holdman. The Commerce Department initially budgeted $50 million for wetland preservation and restoration but has already spent $55.5 million, with another $72 million now needed.
Separately, Governor Henry McMaster has requested an additional $50 million in his FY2027 budget proposal to cover inflationary construction costs. "Costs went up. Contracting costs went up. We agreed, we will get the site prepared," McMaster said earlier this month.
Commerce Secretary Harry Lightsey acknowledged the state lacks regular funding to pay contractors on schedule, meaning taxpayers will foot the bill sooner than planned.
The situation highlights the asymmetric risk in large-scale incentive deals: while cost overruns are common in major construction, here the financial exposure falls disproportionately on the public. Scout's parent company, Volkswagen, reported over €40 billion ($47.6 billion) in liquid assets at the end of 2024.
Meanwhile, the EV market outlook has cooled since the project was announced. Federal tax credits for EV purchases expired in October 2025, leading to a sharp quarterly sales drop. Cox Automotive reported Q4 2025 EV sales fell 46% from the previous quarter.
Scout aims to eventually produce up to 200,000 vehicles annually at the site. But with demand uncertainty growing, the company—and the South Carolina taxpayers backing it—face a longer, costlier road to production than initially envisioned.
Michael Torres, Economic Policy Analyst, Columbia: "This is a classic case of incentive overreach. States are assuming unprecedented risks to attract EV projects, often shielding billion-dollar corporations from market realities. The public deserves transparency on contingency plans if demand doesn't materialize."
Janice Fowler, Small Business Owner, Blythewood: "I supported this project for the jobs it promised, but now I'm worried. Every extra dollar going into site prep is a dollar not going to our schools or roads. Why are we cushioning a Volkswagen subsidiary from costs any other business would bear?"
David Chen, Automotive Industry Consultant: "The wetland costs reflect evolving regulatory expectations, which weren't fully priced in. While concerning, such overruns aren't uncommon in greenfield projects of this scale. The key is whether the long-term employment and supply-chain benefits justify the upfront public investment."
Rebecca Hayes, Former State Budget Office Staffer: "This is fiscal negligence. We're writing blank checks to a global automaker while basic state services are underfunded. The original deal was already generous—now we're being asked to cover their forecasting errors? It's corporate welfare disguised as economic development."