Why Foxconn Jilted Wisconsin

Every time the comedy of Foxconn seems like it can’t get any worse, yet another bizarre development occurs. In the latest twist, Foxconn has decided to manufacture electric vehicles not in Wisconsin, the state that agreed to provide a $4.1 billion subsidy, the largest in U.S. history for a foreign-owned company, but in Ohio, which has offered not one dollar in public support.

The response from state leaders, both Republicans and Democrats, has been oddly muted. Considering the state has already spent $681 million in upfront costs for Foxconn, with another $552 million still promised by local officials in Racine County, without Foxconn building the plant it promised, you might expect a heated discussion of why the company picked a different state to manufacture its cars. And in hyper-partisan Wisconsin, you’d definitely expect a rush by each party to blame the others for losing Foxconn. Instead no one is talking about this.

Perhaps that’s because each party feels vulnerable on a key issue. Recall that Foxconn made a deal in May with Fisker to produce electric vehicles, and which looked like they would be assembled at Foxconn’s heavily subsidized manufacturing campus in Mount Pleasant. But Fisker CEO Henrik Fisker declared that he wanted a Wisconsin law changed to allow automakers to sell directly to customers, as Urban Milwaukee reported. “The one sticking point for Fisker… would be that I don’t want to start producing a car in a state where I can’t sell my car direct,” Fisker said.

But such a change is opposed by the Wisconsin Automobile & Truck Dealers Association, which has resisted this for years. In 2017 Sen. Chris Kapenga (R-Delafield), co-authored such a bill, which was pushed by the electric vehicle company Tesla and supported by the Metropolitan Milwaukee Association of Commerce and the Wisconsin Technology Council. Back then Republicans had total control of legislation, with Scott Walker still serving as governor. But auto and truck dealers contributed more than $1.7 million to Wisconsin legislative and statewide candidates between January 2011 and June 2021, including  $740,203 to Walker, and $50,562 to then-Lieutenant Governor Rebecca Kleefisch, according to figures compiled by the nonpartisan Wisconsin Democracy Campaign. The bill went nowhere.

In 2019 the Republicans slipped a provision into the state budget to allow direct sales of autos, but that quickly became controversial. Evers vetoed the provision, calling it a “payoff” to secure the vote of Kapenga, who had opposed the budget bill, and admitted he requested the provision. Kapenga, it turns out, owns a business that sells Tesla parts and rebuilds the vehicles. So the deal looked smelly.

Evers signaled he was open to stand-alone legislation to change the law. But he too, has received donations from the auto and truck dealers, totaling $46,425.

After Fisker made the request for the change in state law, state Sen. Dale Kooyenga (R-Brookfield) and Rep. Adam Neylon (R- Pewaukee) pushed a bill to do this during the past summer. But there was no sign that top Republican leaders, Assembly Speaker Robin Vos and Senate Majority Leader Devin LeMahieu, supported the bill. Nor did Evers issue any statement. So far it’s gone nowhere.

Yet it’s not clear this is the reason Foxconn decided to make cars in Ohio. For starters Ohio, too, has a ban on direct sales of cars (though it is not as complete as Wisconsin’s, allowing Tesla to create three showrooms for its cars.) More importantly, as a story by Bloomberg reported, Foxconn will be getting an auto assembly plant in North America that is ready to go and where it can build its open-source electric vehicle platform more speedily. The Lordstown Motors Corp. facility is a 6.2 million-square-foot plant that will cost Foxconn $230 million.

By contrast, Foxconn’s main building on its Mount Pleasant campus is slightly less than 1 million square feet and designed to manufacture “thin-film-transistor liquid-crystal display” products, which has never happened. The campus includes three other, much smaller buildings whose purpose is unclear and at which there is still nothing getting manufactured.

Whereas plans for the Lordstown facility are on a tight timeline, the story noted. Foxconn plans to start mass production of electric vehicles in April, and “one of the projects Foxconn will build at the Lordstown plant is Fisker’s Project Pear.”

Given the long list of projects Foxconn announced for Wisconsin that never happened, there’s room for doubt about the Ohio venture. But one difference is Foxconn is spending serious money — and with no public subsidy — to make this happen. “It’s rapidly expanding its EV business,” Bloomberg reported. “Over the past year, the Taiwanese company has launched an open EV platform, inked a manufacturing deal with Fisker and formed a partnership with Thailand’s state-owned conglomerate PTT Pcl.”

Foxconn, as always, played the PR game with Wisconsin, issuing a press release assuring the state it “will continue to serve as a potential location for additional investment for Foxconn’s electric vehicle growth in the United States.” But the spending of $230 million on the Ohio plant tells an entirely different story, that the Wisconsin campus was not a cost-effective option, even with a per-job subsidy (downsized from the deal originally signed by Walker) offered by the Evers administration. Moreover, Foxconn’s partner Fisker has made clear it doesn’t want to manufacture cars in Wisconsin unless the state law is changed. And that seems unlikely.

Foxconn’s press release also noted that Wisconsin will “continue to be the location for data infrastructure hardware and Information and Communication Technology production,” which is the same sort of vaguely high tech promise it has been making for more than three years, and which has amounted to nothing.

It remains to be seen if Foxconn and Fisker can succeed in the competitive and fast changing EV market. Some analysts have suggested Fisker is too far behind companies like Tesla, Volkswagen and General Motors. But one thing is very clear: three years and three months after Foxconn made its big deal with Wisconsin, the company still hasn’t figured out what, if anything, it can manufacture in this state.