State approves $824M in incentives for GM battery, EV plants

Kalea Hall Breana Noble
The Detroit News

The Michigan Strategic Fund board on Tuesday unanimously approved $824.1 million in state incentives for General Motors Co. to invest $7 billion into four projects, including two electric-vehicle investments in Orion Township and near Lansing totaling $6.5 billion. 

The projects are expected to create 4,000 new jobs. The MSF board, which is the governing body of the Michigan Economic Development Corp., approved a $600 million Critical Industry Program performance-based grant and a $66.1 million Strategic Site Readiness Program grant for GM's investments.

MEDC CEO Quentin Messer described the votes Tuesday morning as “historic.”

The "transformation opportunity" has the potential to generate $28.8 billion of new personal income over the next 20 years for Michigan residents, said Joshua Hundt, MEDC executive vice president.

“As the automotive industry is in a full-fledged transition to electrification investments of this type," Hundt said, "Michigan must ensure that we continue to be the home of the North American automotive industry for generations to come."

The grant programs were recently created by Gov. Gretchen Whitmer in collaboration with the Republican-led state Legislature to spur economic development by companies like GM. Whitmer and lawmakers put $1 billion into the initiative after losing out on a $11.4 billion investment by GM's crosstown rival Ford Motor Co., which chose to take similar EV projects south to Kentucky and Tennessee. The GM proposal would use two-thirds of the initial money. Lawmakers have to sign off on allocating the money, which they are expected to do soon.

"You definitely got our attention as we were engaged in a multi-state site selection for these projects," Candace Butler, GM's global manager of economic development, told the board about the initiatives. "Your new programs will enable GM and our joint venture partner Ultium to make critical strategic decisions and have the flexibility to manage our operations and implement new initiatives, which we believe will make transportation better for everyone."

The board also approved a Renewable Energy Renaissance Zone, exempting the company from taxes levied by the city for an 18-year period on the site where GM and battery partner LG Energy Solution plan to build $2.5 billion battery cell manufacturing plant in Delta Township near Lansing. The exemption is estimated to be worth $158 million.

The grant programs also will aid GM in a massive investment at its Orion Assembly plant where the automaker plans to spend $4 billion to convert the plant for electric truck production. The Detroit News first reported Friday that GM would announce the investments Tuesday, and on Monday, GM said it would make a "major Michigan investment announcement" at 11 a.m. Tuesday

"GM and Ultium are proposing the largest investment in the company’s history to be made here in Michigan as a next step in a U.S. manufacturing investment strategy, including offering quality jobs for workers and a commitment to ongoing manufacturing in Michigan communities," an MSF board memo for Tuesday's meeting said. 

The memo notes the Detroit automaker "has considered Michigan for previous battery cell manufacturing projects but ultimately chose locations in the key competitor states of Ohio and Tennessee based on incentive assistance offered by those states. Incentive assistance is necessary to ensure this project moves forward in Michigan, particularly in a highly competitive environment."

Beyond its EV investments, GM is also planning to invest $500 million at its Lansing Delta Township and Lansing Grand River assembly plants, which both still make gas-powered products.

The Delta plant is down for several weeks as it goes through facility and equipment modifications for future product. The plant makes the Buick Enclave and Chevrolet Traverse, but last year GM said it would invest $100 million in the facility to relocate production of the GMC Acadia there from the Spring Hill, Tennessee, plant that is transitioning to build electric and gas-powered Cadillacs.

The project's groundbreaking could begin this quarter and be completed within two years, said Bob Trezise, CEO of the Lansing Economic Area Partnership.

"States are recognizing that the economic shape of the next 20 years is occurring right now," he said during the meeting. "This rare moment in history is defining the future of whole industries in which communities and states remain on the cutting edge of the global future economy. All of these massive projects are receiving specially approved or newly advanced economic incentives from states and communities, and we know that companies have choices. And I'm convinced that our partnership today will demonstrate that Michigan and the Lansing region and Orion Township are the right choices."

GM's Orion plant is home to the Chevrolet Bolt EV and EUV, but production has been down for months as GM works through a battery fire risk recall on the products, prioritizing Bolt batteries for the recalled population.  

GM intends to make "several additions totaling over 3 million square feet, renovation to certain areas of the facility and site improvements over the next 3-5 years along with machinery, equipment and special tooling," to transition Orion Assembly for electric truck production, according to the MSF board memo. 

The investment is said to create 2,300 new jobs and retain 1,000 at the plant. Orion Township tax incentive requests said the construction would start this summer. Oakland County Executive David Coulter also said the county would support workforce development and training.

"We are thrilled and delighted to have this investment in Oakland County and in our state of Michigan," he said during the MSF meeting. "We think it's a critical investment for our county and our state. ... Having a sustainable economy is critical as we move forward with our economic plans in Oakland County, and General Motors' commitment is a testament to their commitment to Michigan."

GM and LG Energy Solution through their joint venture Ultium Cells LLC are planning to put their third U.S. battery cell manufacturing site in Delta Township. The building and related site improvements will be about 2.5 million square feet, according to the memo. The project is expected to bring up to 1,700 new jobs to the area. GM received tax incentive support from Lansing City Council and the Delta Township board. 

"It is anticipated the influx of jobs will result in spin-off investments and redevelopment opportunities," the MSF memo notes. "Over $28.8 billion in new personal income is expected to be generated by the direct, indirect, and induced jobs that this opportunity will create over 20 years."

Staff writer Craig Mauger contributed.