A subsidiary of Chinese battery company Gotion has abandoned plans to build a $2.4 billion plant in Michigan to produce key materials for electric vehicle batteries, the state said Thursday.
The project, first announced in October 2022, was expected to create 2,350 factory jobs but has come under criticism from some lawmakers due to Chinese ownership of the company.
The Michigan Economic Development Corporation (MEDC) said that no portion of the $125 million state grant intended for the project was ever disbursed and that it intends to recoup another $23.6 million in state funding used to purchase the land.
Germany’s Volkswagen is the largest single shareholder in Gotion Inc‘s parent company, owning about 30% of Gotion High-Tech. However, some US lawmakers said last month that China maintains “effective control” through several individual shareholders.
Benjamin Howes, Gotion Inc’s head of institutional and public relations, did not respond to specific questions about the plant, but said in a statement that the company “remains firmly committed to its mission of leading America’s clean energy future,” including through a plant in Illinois.
Volkswagen was not available for comment.
In March 2024, Gotion sued Green Township, Michigan, accusing it of violating an agreement to build the plant.
Last month, MEDC sent Gotion a letter saying the company was in default of its financing agreement because no action had been taken on the project site for more than 120 days. The state had given Gotion 30 days to cure the default.
A lawyer representing Gotion Inc wrote in a letter to the MEDC, seen by Reuters, that it is “absolutely false” to accuse the company of abandoning the project.
He added that due to a “barrage of attacks Gotion has faced on this site” and opposition from Green Township, it would be more appropriate to suspend the default filing for six months in order to have “an open and frank discussion about the feasibility of the project and the long-term plan for this site.”
Over the past year, Americans’ waning enthusiasm for electric cars has led automakers to postpone or cancel factory projects. After the recent changes in electric vehicle policies decided by the Trump administration, automakers are further reducing investments.
Representative John Moolenaar, a Michigan Republican and chairman of a special committee on China, praised the withdrawal of state support for the project. Moolenaar had worked with Green Township residents to oppose the project and ban U.S. government subsidies to battery companies affiliated with Chinese entities like Gotion.
