Michigan OKs $715 million in incentives for Gotion battery plant

Michigan officials have approved a bundle of incentives valued at $715 million for a $2.4 billion electric vehicle battery plant to be built by a Chinese manufacturer in the Big Rapids area.

The incentives for Gotion Inc., given the green light Wednesday, include $175 million of funding from the Strategic Outreach and Attraction Reserve, according to a briefing memo from the Michigan Economic Development Corp.

Gotion is partially owned by Volkswagen Group. The automaker destined to get the batteries has not yet been disclosed.

A 30-year Renaissance Zone property tax abatement, approved by local officials last week, is valued at $540 million.

The project is expected to create up to 2,350 jobs across four new manufacturing plants spanning a combined 2 million square feet. It will generate over $13 billion of personal income and create spinoff investments and redevelopment opportunities, according to officials.

“The shift to electrification is truly revolutionary, and investment decisions being made now will have positive or detrimental impacts on regions for decades to come,” the briefing memo said. “The importance of securing this investment to both the local and broader state economy cannot be overstated.”

Approval of incentives for a company based in China, long positioned by politicians as an adversary in manufacturing and technology, has raised criticism, but officials have pointed to job creation as a win for the community.

The average hourly wage for the Gotion plant would be $29.42, compared with a target living wage known as ALICE of $17.99, according to the MEDC. The jobs are expected to be an economic boon for a geographically disadvantaged area around the plant.

For the SOAR funding, $125 million is in the form of a Critical Industry Program performance-based grant, while $50 million is a Strategic Site Readiness Program performance-based grant, which will be used for site prep on the 523 acres pegged for development.

Two legislative committees, the House and Senate budget panels, will next be asked to approve the transfer of SOAR funding to support the Gotion project. The fund, which Michigan created less than a year ago to back big economic development deals, currently has $846.1 million after Gov. Gretchen Whitmer on Monday signed a spending bill to replenish it.

Officials said the tax breaks are crucial to not losing the investment from Gotion, which has chosen other states for projects in the past.

“The automotive industry is in an accelerated, full-fledged transition to electrified propulsion, the impact of which will be transformative and far-reaching,” the memo said. “In order to maintain automotive manufacturing relevance, let alone leadership, it is imperative for the State of Michigan to capture as much investment in the research, development, and production of advanced battery technologies as possible.”

– Crain’s Senior Reporter David Eggert contributed to this report

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