State board OKs $715M tax incentives for Gotion's Big Rapids battery parts plant
The Michigan Strategic Fund board on Wednesday approved a Renaissance Zone tax exemption request and $175 million in state grants for Chinese-owned Gotion Inc. to build a $2.4 billion electric vehicle battery parts facility on the outskirts of Big Rapids.
The property tax exemption granted by the board for the Michigan Economic Development Corp. will save the company $540 million over a 30-year period, according to estimates. The approval comes after three local government boards last week unanimously approved the Renaissance Zone request for the project that's expected to create 2,350 jobs over the next decade.
The $175 million in grant funding is made possible through new programs the state Legislature created at the end of 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 affording us this opportunity."
The MSF board specifically approved a $50 million Strategic Site Readiness Program grant and a $125 million Critical Industry Program grant. The money for those grants will come from the state's Strategic Outreach and Attraction Reserve (SOAR) Fund. The Michigan Legislature last week approved a $1 billion spending plan with $846 million going to the SOAR Fund.
Gotion plans to use the plant for cathode and anode precursor component production. Final assembly will be done elsewhere in North America at a location that has not been announced. Cathodes and anodes are the electrodes that produce an electrical charge in the battery cell. At completion, the Big Rapids facility would make 150,000 tons of cathode material and 50,000 tons of anode material per year, according to the MEDC.
The plant would be complete by 2030, with an investment of $2.4 billion over the first six years, according to the Renaissance Zone request submitted by The Right Place, a Grand Rapids-based economic development group.
Company leaders told local officials considering the tax exemption last week that it toured about 40 sites throughout the U.S. before landing on the 523-acre site adjacent to the Big Rapids airport and U.S. 131.
Gotion was founded in China in 2006 but its U.S. subsidiary has been incorporated in California since 2014. Major automaker Volkswagen AG owns more than 26% of the company.
Gotion has been focused on research and development activities in Cleveland and Fremont, Calif. The company is now focusing on establishing battery cell production capacity in the U.S., according to its request for taxpayer support for the Big Rapids project.
Gotion's products include lithium iron phosphate materials and batteries, which are becoming increasingly more popular for EV use. These LFP batteries are cheaper to make than nickel and cobalt batteries. They are also less likely to catch fire, The Detroit News previously reported in its series on EV battery fires. The downside to LFP batteries is they do not have as much energy density, reducing their range capabilities.
UBS analysts recently said they expect LFP batteries will have 40% of the global battery market by 2030, up 25 percentage points from their previous estimates since their range has somewhat improved, according to a S&P Global Mobility report on the analysis.
Tesla Inc., startup Rivian Automotive Inc., Ford Motor Co., Stellantis NV have all said they are looking at using LFP for their EVs.
In June, Gotion said it would look to locate a third of its production capacity outside China by 2025 to meet EV demand abroad, Reuters reported.
Chuck Thelen, global vice president for Gotion, told the MSF board Wednesday the global company "set our next target for North America to comply with legislation that's obviously really pushing the EV market."
He called the Big Rapids components plant "very critical" for 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 prepping to launch production of electric versions of the Chevrolet Silverado, Equinox and Blazer next year.
GM is partnered with LG Energy Solution for battery cell manufacturing.
It's unclear what automakers will receive battery components from Gotion's Big Rapids facility, but experts have previously said they will not have difficulty finding customers.
Staff writer Beth LeBlanc contributed.