Gotion High-Tech, a Chinese electric vehicle battery supplier for Volkswagen and other big auto names, will build its first major American factory in Michigan as the company gears up to meet growing demand in the US.

Why it matters: The investment is a big boost for Michigan, a state heavily focused on the automotive industry,  and an encouraging signal following US president Biden’s executive order to pass the Inflation Reduction Act into law, which could make China-made EVs and components ineligible for federal tax credits.

  • On Aug. 16, US president Joe Biden signed a $430 billion climate and energy bill, or the Inflation Reduction Act, into law which offers buyers up to $7,500 in tax credit for EVs with critical battery materials produced in the US.

Details: Gotion will build a $2.4 billion facility in Big Rapids, Northern Michigan, to produce up to 150,000 tons of lithium-ion battery cathode material and 50,000 tons of anode material annually, according to a Wednesday briefing from the governor’s office.

  • Gotion will be deemed eligible for $175 million in financial incentives due to its creation of 2,350 jobs, along with a designated tax-free property for 30 years, estimated to be worth $540 million.
  • Investments like these are “game changers” as Michigan looks to maintain global leadership in vehicle manufacturing, Governor Gretchen Whitmer told the Associated Press.
  • The facility will “possibly have enough capacity to sell these two critical components to other North America based battery manufacturers,” Bloomberg reported, citing Chuck Thelen, vice president of Gotion Global.

Context: Meanwhile, Michigan is also offering $236 million in economic incentives as Our Next Energy, a US EV battery startup backed by BMW, is set to invest $1.6 billion and create 2,100 jobs at a planned battery facility near Detroit.

  • Backed by Volkswagen (the biggest shareholder with a 24.77% stake), Gotion announced plans late last year to provide a public-listed US automaker with 200 gigawatt-hours (GWh) of lithium-iron-phosphate batteries from 2023 to 2028. Gotion did not give the name or other information on the automaker.
  • Gotion’s rival and top Chinese EV battery maker CATL is also in final discussions to build its first US battery facility, probably in South Carolina and is aiming for operations beginning in 2026, according to a May 6 report by Reuters.  
  • The Fujian-based company reportedly delayed the announcement of the plan after US House Speaker Nancy Pelosi visited Taiwan in early August. Ford and BMW are among the expected clients.

Jill Shen

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen