Michigan, long the auto manufacturing capital of the United States, is now receiving public and private investment to build a series of battery manufacturing plants that will in turn power the wave of electric vehicles coming to market. Demand for the country’s homegrown batteries has reached a new peak following the passage of the U.S. Inflation Reduction Act (IRA), which includes tax incentives for consumers who purchase electric vehicles that use U.S.-made battery materials.
Battery manufacturers are rushing to grab available land and begin producing in factories to meet this demand, support their own supply chains and qualify for incentives under the IRA.
In 2021 and 2022, battery plant announcements and automaker-battery manufacturer joint ventures are already becoming commonplace – especially in Michigan, Tennessee and other Southeastern states. And they don’t seem to be slowing down.
Now, Michigan has secured two more projects this week.
Chinese battery maker Gotion announced a $2.36 billion investment to build a battery parts plant in Grand Rapids, a company that promises 2,350 jobs. Also, Michigan welcomed a $1.6 billion investment from Our Next Energy (ONE), an electric vehicle battery startup helmed by the former leader of Apple’s secret car program, which will build a battery plant in Van Buren Township so it can produce enough batteries for about 200,000 EVs a year.
In a statement on the Gotion investment, Michigan Governor Gretchen Whitmer said, “I am proud that Republicans and Democrats have worked across the aisle to build our economic development toolkit, which gives Michigan the ability to compete for every project and every job. Together, we will continue to win investment in this area and be the preeminent destination for electric vehicles and mobility companies. We will work with anyone, compete with everyone and keep bringing the supply chain of batteries, chips and electric vehicles back to Michigan.”
Earlier this week, Whitmer signed a package that includes additional investments in Michigan’s Strategic Expansion and Attraction Reserve (SOAR) fund – $496 million for future economic development projects and $350 million for statewide site development. The fund, totaling $1.11 billion, is partially responsible for helping Michigan attract investment from Gotion and ONE.
Michigan is clearly competing with Texas, Georgia, Kentucky, South Carolina, Illinois and Ohio for Gotion, but the SOAR fund helped provide the right incentives to win business – including about $175 million to support key industries and site preparation.
The fund was also used to approve a $200 million grant to support ONE’s project, which promises to create 2,112 jobs by the end of 2027 when the plant should be fully operational. If ONE does not create or maintain that number of jobs, then the state can recoup the money.
Michigan’s incentives have also attracted automakers looking to produce their own batteries domestically in the United States.
Earlier this year, GM invested $7 billion to convert its Orion Township assembly plant into a full-size electric vehicle pickup plant and build a third battery cell plant in Lansing for Ultium, GM’s battery joint venture with LG Chem. The state has included a total of $666.1 million in support for GM’s project.
In June, Ford said it would invest $2 billion in three electric vehicle assembly plants in Michigan. The state put in another $100.8 million.
Breaking down new investments
The IRA not only incentivizes domestic battery production in the U.S., creating new jobs and industries in the country but also reduces dependence on China.
Gotion’s investment in Michigan follows the overseas expansion of other Chinese battery giants – both to continue supplying the U.S. market and to find a home for their products. Like CATL, which is building a plant in North Carolina, SVOLT is building its second German facility.
Gotion’s Michigan plant will cover about 260 acres and will produce about 150,000 tons of cathode material per year through two 550,000-square-foot production plants, according to the Michigan Economic Development Corporation. The project will also include the construction of two production plants dedicated to the production of 50,000 tons of anode material per year.
Like Gotion, ONE intends to produce lithium iron phosphate (LFP) batteries at a full capacity of 20-gigawatt hours per year. Most of the U.S. auto industry has focused on lithium-ion batteries containing varying amounts of more expensive metals such as nickel, cobalt, manganese and aluminum, which have higher energy densities and better ranges but have also been linked to multiple battery fires. lFP technology is typically cheaper and less volatile but has a worse range. Many automakers are now exploring such batteries, in part to ease the shortage of materials.
ONE said its LFP battery packs would have the same range as current packs using nickel, cobalt and manganese cathodes, but would cost 35 percent less. Production of the batteries for delivery trucks is scheduled to begin in March, followed by production for automotive customers by the end of 2024, the company told the Wall Street Journal.
The company also intends to produce a battery pack with a range of more than 600 miles, with batteries that are 50 percent cheaper than the current standard. The battery pack, which is scheduled to go into production in 2026, will include two chemistries. LFP technology for daily driving and an anode-free battery for long-range travel.
Neither ONE nor Gotion have revealed which automakers they will work with once their batteries are up and running, though ONE has already partnered with BMW to produce BMW iX models using some of its battery technology.
