SC Commerce’s long-delayed Volvo rail line gets final funding
Lawmakers have approved the last major piece of public financing for a rail line the state promised about eight years ago to bring the Volvo Cars plant to South Carolina.
A legislative panel on May 16 authorized the S.C. Commerce Department to draw $48.5 million from a special economic development fund for the long-delayed project, now projected to cost $185 million, or about a third more compared to a 2021 estimate.
The 22.7-mile track will run north and south through a swath of timberland between the Camp Hall business park near U.S. Interstate 26 to an existing freight transfer site that CSX Corp. operates in Cross.
It will be owned and operated by the Commerce Department’s Charleston-based Palmetto Railways division.
The first phase of construction began last month, according to documents provided to the state Joint Bond Review Committee, which approved the funding request Tuesday.
The line, which federal railroad regulators approved in 2019, is expected to take about three years to complete.
Commerce’s financial contribution is $144 million, or more than three-quarters of the total, and the agency cited “higher materials costs, construction costs and inflationary costs” for the increased price estimate. Volvo and CSX are chipping in $6 million and $10 million, respectively. A federal transportation grant awarded two years ago is expected to cover the rest.
The rail infrastructure was part of a 2015 incentive package that the state offered Volvo in exchange for picking South Carolina for its first and only U.S. manufacturing plant. A lack of money has put the project on hold.
In a letter to the lawmakers last month, Commerce chief Harry Lightsey said the 4-year-old $1.2 billion factory near Ridgeville is one of the state’s biggest economic development victories in recent memory.
He also said Volvo’s local rail service needs are increasing as the carmaker transitions to building electric vehicles in South Carolina and looks to reduce its reliance “on international supply chains.”
Lightsey said the company has already negotiated deals with CSX to haul away from the plant as much as 75 percent of the cars that are made for the U.S. market. Right now, most are transported by trucks to a site near Columbia to be loaded onto rail cars.
“This has put an additional strain on I-26, which is already one of the more congested highways in our state,” Lightsey wrote. “And the problem will only worsen as Volvo increases its domestic production of finished vehicles and sourcing of automotive components from domestic suppliers.”
He added that the CSX site in Cross directly feeds into a high-density line that serves the entire seaboard, from New England to Florida.
“These are many of Volvo’s domestic markets,” Lightsey said.
Commerce said other companies opening in Camp Hall Commerce Park also will require rail service, including the $3.5 billion battery recycling plant that Redwood Materials is building at the property.
State Rep. Gilda Cobb Hunter of Orangeburg asked Tuesday whether the new line would cut back on the number of trucks on I-26 between Charleston and Columbia, which she referred to as “that parking lot.”
Lightsey wouldn’t go that far, saying Camp Hall isn’t yet built out and likely isn’t a major source of congestion.
“I’m not sure we’ll see a reduction … but what I think we’ll see … overall is significantly less truck traffic than we would otherwise have seen,” he said.
Volvo has been building the S60 sedan in Berkeley County since 2019.
The plant’s electric-vehicle launch was dealt a setback last week when the company announced it was postponing production of the EX90 to 2024 from later this year, citing unspecified software problems. The same issues also are delaying the rollout of another battery-powered vehicle that Volvo will build in South Carolina for its Polestar sister brand.
The company did not have an immediate comment Tuesday about the rail line funding.