Gotion Inc., a manufacturer of batteries for electric vehicles, has announced plans to open a production facility in Big Rapids, Michigan. The project is expected to bring an estimated 2,350 jobs to the state, but a group of Republican congressional representatives has proposed legislation that would block the company from receiving federal incentives that are being used to expand manufacturing in the United States.
If the legislation becomes law and subsidies are rescinded, companies like Gotion, which is based in Hefei, China, may decide against building their new facility. Projects planned by other companies with foreign ownership, including the Chinese-owned CATL, who previously announced plans for an EV battery factory in Michigan in coordination with Ford, could also be affected.
Gov. Gretchen Whitmer announced in October 2022 that Gotion planned to invest $2.36 billionin the project and described it as the biggest economic development project in northern Michigan.
“We will work with anyone and compete with everyone to keep bringing supply chains of batteries, chips, and electric vehicles home to Michigan,” Whitmer said in a statement.
The state government’s Michigan Strategic Fund approved at least $175 million in grants to convince Gotion to pick Michigan for its location over bids from Texas, Georgia, and Kentucky. The Michigan Economic Development Corporation said it expected over $11.5 billion in new personal income to be generated by the project, both directly and indirectly, over a 20-year period.
After the first round of job announcements were posted in September, Gotion said it had received over 350 applications for the first 10 positions it made available.
“The ‘Gotion effect’ is real and continues to gain momentum across our region because we are giving people an opportunity for good-paying jobs with a tremendous benefits package,” Chuck Thelen, a vice president at Gotion, told the Big Rapids Pioneer.
A report released by the U.S. Department of Energy in January projects that Michigan will be one of three states, along with Kentucky and Georgia, to dominate the field of domestic vehicle battery manufacturing by 2030.
Despite the positive economic forecasts, Gotion is facing opposition from Republican lawmakers.
On Nov. 2, Michigan U.S. Rep. John Moolenaar introduced the No Official Giveaways Of Taxpayers’ Income to Oppressive Nations (NO GOTION) Act. The legislation says that companies that are affiliated with the Chinese Communist Party cannot receive tax incentives that were included in the Inflation Reduction Act, signed into law in 2022 by President Joe Biden.
“If America is going to have a secure energy supply, we cannot give federal tax credits to CCP-controlled companies and allow them to expand their influence in the U.S.,” Moolenaar said in a release. Other Michigan Congress members sponsoring the legislation are Jack Bergman, Lisa McClain, Bill Huizenga, John James, and Tim Walberg. The bill has a total of 24 co-sponsors who are all Republicans.
When the plans for the facility were first announced in 2022, Republicans in Michigan expressed support for the project. The state Legislature, which had a Republican majority at the time, approved funding for the Strategic Outreach and Attraction Reserve Fund, which was used for a $125 million grant to Gotion to bring the company to Michigan.
Historically, the state’s Republicans have courted Chinese investment in Michigan. Former Gov. Rick Snyder led eight trade missions to China during his time in office. But by 2022, Republican gubernatorial candidate Tudor Dixon was criticizing doing business with China and raising concerns about the Chinese Communist Party wielding influence in Michigan. Dixon lost to Whitmer in November 2022.
Following years in which the U.S. has lagged behind other nations, particularly China, in electric vehicle manufacturing, the Inflation Reduction Act contains provisions to encourage companies to move their operations to America.
Companies involved in clean energy receive tax credits for building production facilities in the United States. The Biden administration has prioritized clean energy investments as a way of reducing emissions that contribute to climate change while also creating jobs.
Gotion said in June that it voluntarily submitted documents to the Department of Treasury’s Committee on Foreign Investment in the United States, which reviews real estate transactions by foreign companies and people in the country. If those transactions are determined to be a threat to national security, the president can suspend or block them.
The company said that the committee had determined that its planned purchase of land in Michigan was “not a covered transaction.”
The Inflation Reduction Act passed in Congress with only Democratic votes and was unanimously opposed by Republicans, including Michigan’s congressional delegation.
The Treasury Department described the law as “one of the largest investments into the American economy in a generation” in an August memo marking the first anniversary of the bill’s passage. The department noted that while the Chinese government has directly funded expansion of China’s industrial capacity, the Inflation Reduction Act is designed to use U.S. government incentives to attract private investments.
“By doing so, the Inflation Reduction Act will unlock $3 trillion of investment in America for renewable energy technology,” the memo said.
The Biden administration has said the law, along with the American Rescue Plan, the Infrastructure Investment and Jobs Act, and the CHIPS and Science Act, is a component of Biden’s Investing in America agenda.According to the White House, private companies have announced over $614 billion in planned investment in Michigan since Biden took office, including $142 billion in electric vehicles and batteries.