State Board Approves $715 Million in Tax Incentives for Gotion’s Big Rapids EV Battery Parts Plant
Michigan’s Strategic Fund board on Wednesday approved a Renaissance area tax exemption request and $175 million in state grants for Chinese company Gotion Inc. to build a vehicle battery parts plant. $2.4 billion powerhouse on the outskirts of Big Rapids.
The property tax exemption granted by the board of directors to the Michigan Economic Development Corp. will save the company an estimated $540 million over 30 years. The approval comes after three local government councils last week unanimously approved the Renaissance area’s application for the project which is expected to create 2,350 jobs over the next decade.
The $175 million in grants are made possible through new programs the state legislature created in late 2021 to spur economic development in the state.
“History is being made,” MEDC CEO Quentin L. Messer Jr. said after the incentives were approved. “We look forward to updated progress and thank you so much for giving us this opportunity.”
The MSF Board of Directors specifically approved a Strategic Site Readiness Program grant of $50 million and a Critical Industry Program grant of $125 million. The money for these grants will come from the state’s Strategic Outreach and Attraction Reserve (SOAR) fund. Michigan’s legislature last week approved a $1 billion spending plan, including $846 million for the SOAR fund.
Gotion plans to use the plant for the production of precursor cathode and anode components. Final assembly will take place elsewhere in North America at an unannounced location. Cathodes and anodes are the electrodes that produce electrical charge in the battery cell. Upon completion, the Big Rapids facility would produce 150,000 tons of cathode material and 50,000 tons of anode material per year, according to the MEDC.
The plant would be completed by 2030, with an investment of $2.4 billion over the first six years, according to the Renaissance Zone application submitted by The Right Place, a Grand Rapids-based economic development group.
Company executives told local officials considering the tax exemption last week that it visited about 40 sites across the United States before landing at the 523-acre site adjacent to Big Airport. Rapids and US 131.
Gotion was founded in China in 2006, but its US subsidiary has been incorporated in California since 2014. Major automaker Volkswagen AG owns more than 26% of the company.
Gotion focused on research and development activities in Cleveland and Fremont, California. The company is now focused on establishing battery cell production capacity in the United States, in accordance with its request for taxpayer support for the Big Rapids project.
Gotion’s products include iron phosphate and lithium materials and batteries, which are becoming increasingly popular for electric vehicles. These LFP batteries are cheaper to manufacture than nickel and cobalt batteries. They’re also less likely to catch fire, The Detroit News previously reported in its series on electric vehicle battery fires. The downside of LFP batteries is that they don’t have as much energy density, which reduces their runtime capabilities.
UBS analysts recently said they expect LFP batteries to hold 40% of the global battery market by 2030, up 25 percentage points from their previous estimates, as their range improved somewhat, according to an S&P Global Mobility report on the analysis.
Tesla Inc., startup Rivian Automotive Inc., Ford Motor Co., Stellantis NV have all said they are considering using LFP for their electric vehicles.
In June, Gotion said it would seek to locate a third of its production capacity outside China by 2025 to meet demand for electric vehicles overseas, Reuters reported.
Chuck Thelen, Gotion’s global vice president, told MSF’s board on Wednesday that the global company “has set our next goal for North America to comply with legislation that clearly is really pushing the electric vehicle market.”
He called the Big Rapids component plant “very critical” to Gotion’s capacity plans in North America.
Automakers, including the Detroit Three, are investing billions in their transition to electric vehicles. General Motors Co., for example, is preparing to start production of electric versions of the Chevrolet Silverado, Equinox and Blazer next year.
GM is in partnership with LG Energy Solution for the manufacture of battery cells.
It’s unclear which automakers will receive battery components from Gotion’s Big Rapids plant, but experts have previously said they won’t have trouble finding customers.
Personal Writer Beth The White contributed.