Michigan terminates controversial EV battery plant and seeks to claw back millions in incentives

The state Capitol building is seen on Dec. 12, 2012, in Lansing, Mich. (AP Photo/Carlos Osorio, File)

Michigan is demanding millions of dollars in incentives back from a Chinese company after plans to build an electric vehicle battery plant collapsed following years of pushback against the project from neighbors and members of Congress.

Democratic Gov. Gretchen Whitmer supported the US$2.36 billion factory in 2022, and state lawmakers approved nearly US$175 million in incentives for the project. The state is now holding Gotion Inc. in default of US$23.6 million, accusing the company of abandoning the project.

“While this is not the outcome we hoped for, we recognize the tremendous responsibility we have to the people we serve to make sure their hard-earned tax dollars are spent wisely and appropriately,” Danielle Emerson, a spokesperson with the Michigan Economic Development Corporation, said in a statement.

Representatives for Gotion, which is headquartered in California, did not respond to multiple messages seeking comment.

In a letter dated Sept. 17, Michigan informed Gotion that it was in default of economic development grant obligations because no “eligible activities” had occurred on the site’s property in over 120 days.

According to the MEDC, the state is seeking to claw back US$23.6 million that was disbursed toward the purchase of the site’s land near Big Rapids, about 200 miles (322 kilometers) northwest of Detroit. US$26.4 million remaining from the grant that was not spent will be returned to the state, Emerson said. Citing a lack of progress on the project, a different US$125 million grant was not distributed to Gotion.

The news was first reported by Crain’s Detroit Business.

The state also said two project-related lawsuits are imposing a “material adverse effect” on its progress, which counts as grounds for default. The letter said that if the defaults are not resolved in 30 days, the state expects repayment of US$23.6 million. That deadline passed Oct. 17.

Residents of nearby Green Township so firmly opposed the project, some over environmental concerns, that voters in 2023 recalled five local elected officials who supported bringing the factory to the area.

Auto manufacturing is the lifeblood of Michigan’s economy, which has been hard hit by tariffs imposed this year on the industry and Canada. When the project was proposed, officials said the factory would produce cathodes and anodes, two components key to electric vehicle batteries, as well as over 2,000 jobs. The original economic development incentives came as officials sought to bolster manufacturing in the state.

Whitmer’s office did immediately respond to a request for comment.

Republican U.S. Rep. John Moolenaar, who represents a swath of rural Michigan, had been the loudest and most prominent critic of the project, accusing Gotion of ties with forced labor and the Chinese Communist Party. Moolenaar chairs the House Select Committee on China and introduced a bill that stopped companies like Gotion from receiving electric vehicle tax credits from President Joe Biden’s Inflation Reduction Act. Moolenaar’s bill was signed by President Donald Trump earlier this year.

“Now that its contract with the State of Michigan and MEDC is set to be terminated, the people of Green Charter Township can finally move on from Gotion’s lies and broken promises,” Moolenaar said in a press release.

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Isabella Volmert, The Associated Press. Associated Press writer Didi Tang in Washington contributed to this report.