GM eyeing $2.5B investment for new battery cell plant in Lansing area
Michigan might get its big piece of the emerging electric-vehicle battery bonanza roughly three months after watching Ford Motor Co. pledge to invest more than $11 billion in two southern states and create 11,000 jobs.
General Motors Co. is targeting Delta Township near Lansing to build its third multi-billion dollar battery cell manufacturing plant in the United States, according to two sources familiar with the situation and tax incentive documents filed with the city of Lansing.
The project could take critical steps forward Monday when Lansing City Council is set to consider GM's request and Tuesday when state lawmakers could approve incentive packages designed to woo large, jobs-creating investments. Through their Ultium Cells LLC joint venture, GM and partner LG Energy Solution are seeking incentives from the city and state to develop a battery cell plant near GM's Delta Township assembly plant.
The proposed investment is pegged at $2.5 billion, according to GM's tax-exemption requests to the city of Lansing, and once fully operational the plant would create 1,700 jobs in the region. Construction would start in May 2022 and come with more than 1,000 jobs. The building and related site improvements will be about 2.5 million square feet. The project is slated to be finalized by 2025, the documents say.
Additionally, the Detroit automaker is evaluating plans to convert its Orion Assembly Plant currently producing the electric Bolt and Bolt EUVs models into a hub that would build either electric trucks or SUVs based on the Ultium battery architecture, according to two sources familiar with the situation. The investment likely would create new jobs at the Oakland County facility north of Detroit.
The news Friday came as Michigan lawmakers and Gov. Gretchen Whitmer's administration, partially inspired by the prospects of the GM project, are racing to create a major new economic development program. The initiative, which could gain final legislative approval on Tuesday, would allow the state to provide funding for large projects to improve sites, to acquire land and to distribute "economic assistance" to create jobs.
The proposed Strategic Outreach and Attraction Reserve Fund program follows Michigan's embarrassing loss in Ford’s decision less than three months ago to partner with SK Innovation to invest $11.4 billion and create 11,000 new jobs in Kentucky and Tennessee to build batteries, assemble electric trucks and form a supplier park.
The Ford decision in large part hinged on competitive industrial utility rates and the availability of large, shovel-ready sites in those two southern states that Michigan does not have. But the Blue Oval's announcement set off a flurry among Lansing lawmakers, business leaders and economic development circles, renewing determination to ensure the state is prepared for the next big opportunity.
"The bottom line is we couldn't check all the boxes for what (Ford) needed, however, there were boxes that we weren't prepared to be able to check," said Glenn Stevens, executive director of MICHAuto and vice president of automotive and mobility initiatives for the Detroit Regional Chamber.
"So it was a wakeup call to make sure that, OK, we're ready to compete when it comes to incentive funds, site development, workforce and talent. I think that it was definitely a rallying cry, and we've seen an incredibly collaborative and quick transformation to be able to make things happen with regards to having the right tools."
The state can't rest easy, experts say. GM alone has announced plans to invest $35 billion in electric and autonomous vehicle initiatives just through mid-decade. And automakers are signaling that the transition to plug-in vehicles may be happening quicker than expected.
"In this case, General Motors is and must be thinking long-term," said Patrick Anderson, CEO of the East Lansing-based Anderson Economic Group. "These investments are huge, and the stakes are much, much larger than an incentive package."
Already Ford has said it's struggling to meet higher-than-expected demand for its first wave of electric products. CEO Jim Farley recently upped the Dearborn automaker's EV production target to 600,000 units globally in the next two years. And on Friday, Ford said it plans to increase production capacity for the battery-electric Mustang Mach-E to 200,000 units per year by 2023.
"It is happening fast," Stevens said. "You're going to have this initial flurry of activity — where people position themselves in the market, position their supply chains — the dust settles for a while and then it picks up again. Because it will. We're not going backwards."
To ensure Michigan is well-positioned to be the home base of these emerging sectors, Stevens said the state must focus not only on securing advanced manufacturing jobs but on building know-how around connected vehicle technologies and electrification: "We're going to have to continue to build the knowledge base part of our economy to make sure that we not only keep what we have but we grow from the base."
GM and LG Energy Solution already are building two other battery cell manufacturing plants with LG in northeast Ohio and Spring Hill, Tennessee. Both of those investments totaled more than $2 billion and come with more than 1,000 jobs. GM executives previously said there would be at least two additional U.S. battery sites by mid-decade but haven't yet named the locations.
"GM is developing business cases for potential future investments in Michigan," spokesman Dan Flores said in a statement. "As part of developing a competitive business case, we are having discussions with the appropriate local officials on available incentives.
"We are not going to speculate or disclose additional details of the projects under consideration beyond any information included in public filings. These projects are not approved and securing all available incentives will be critical for any business case to continue moving forward. I’m not going to speculate on the timing of when GM leadership will make a decision on potential future investments in Michigan."
The GM and LG joint venture is requesting the formation of a renaissance zone. That's a property that is "designated as virtually tax free for any business or resident presently in or moving to a zone," according to a Michigan Economic Development Corp. fact sheet.
The companies also are requesting an industrial tax exemption. Lansing City Council will review the requests at a 5 p.m. Monday meeting. Peter Spadafore, president of the council, said his understanding is there's competition for a battery plant. He vowed to do everything he can to make sure Lansing is competitive.
The property for this project is technically located in Delta Township, but more than 20 years ago, Delta and Lansing signed an economic development agreement transferring the property from the township to the city. Lansing assesses and collects the taxes on the property, according to the agreement. The tax revenues are then divided between the two.
“Lansing is the perfect location for future investment from General Motors and Ultium, and I will do all I can to win this new battery plant and bring these jobs and economic opportunities here," Lansing Mayor Andy Schor said in a statement to The Detroit News. "Our rich GM manufacturing history, our workforce and our two current assembly plants make this area ideal for building the next generation of cars and the batteries needed to power them. "
Otie McKinley, a spokesman for the MEDC, said it would be premature to discuss any potential state support for the GM projects. But Michigan is proud to "remain a global home for opportunity within the future of mobility and electrification," he added.
In its incentive application, Ultium Cells said it would utilize "potential various programs" of assistance for the project "to be determined and offered by the MEDC and local partners."
To transition its gas-powered fleet to run on batteries, GM will need additional battery cell plants. GM's battery-cell ventures with LG are said to have an annual capacity of more than 30 gigawatt hours, which is enough to supply about 300,000 vehicles annually.
Many automakers have brought battery cell making in-house to be more cost-competitive and reduce the risk of relying on outside suppliers for primary parts of vehicles — a lesson the auto industry learned the hard way this year amid the global semiconductor shortage.
"The more plants you have, the more potential you have to sell more vehicles and be the leader in the market," said Sam Abuelsamid, principal research analyst at Guidehouse Insights, adding that "other manufacturers are also moving aggressively."
Michigan's to lose
The News reported in November that GM has 770 acres around its Delta Township plant available, which is enough to accommodate a battery plant similar in size to the one under construction in Lordstown, Ohio. GM President Mark Reuss also recently told The News that GM is keeping its home state under consideration for at least one of two battery plants.
"If the state loses this one, they won't be able to blame it on the company not giving them a chance," said Erik Gordon, a professor at the University of Michigan's Ross School of Business. "It is a test of the state's desire to have next-generation manufacturing in Michigan."
Earlier this week, The News first reported the Whitmer administration and lawmakers were targeting GM with a significant economic development package that could involve millions of dollars to land large projects, like one of GM's battery cell manufacturing plants. The Michigan House approved the package on Wednesday.
State Sen. Ken Horn, chairman of the Senate Economic and Small Business Development Committee, told The News on Tuesday lawmakers are planning to create an "investment fund," hoping to change the fact that site planners are ignoring Michigan.
“We need to send a message to the whole economic development world that you can't keep us off your spreadsheet anymore as you're looking for new developments," said Horn, R-Frankenmuth.
GM also is looking at investing in Orion Township, The News first reported Wednesday. The automaker is considering a $160 million investment at its Lake Orion assembly plant for a new battery pack line. Battery packs house the battery cells that power EVs. Experts expect the move is likely aimed at transitioning the plant to GM's next EV facility that will build products based on its new Ultium electric platform.
Orion currently builds the Chevrolet Bolt EV and EUV, which are not based on Ultium. The plant is down through Jan. 28 as GM works through a recall on the Bolts.
Louis Rocha, president of the United Auto Workers Local 5960 at Orion Assembly, said the local hadn't heard yet of new investment coming to the plant. But it would be welcomed news after being on layoff for months because of the Chevrolet Bolt recall, he said: "We've been waiting for some good news."