Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter
The Michigan Strategic Fund (MSF) alerted Gotion last month that it was defaulting on its obligations to move forward on its planned electric vehicle battery plant near Big Rapids and that it expects repayment of $23.67 million in state grant funds already sent out to prepare the site.
The Sept. 17 letter to Gotion Inc.’s Chuck Thelen signals that the MSF will terminate its $125 million Critical Industry Program (CIP) award. The MSF never sent Gotion any of that money. Another $50 million in state funding was set aside for site readiness, of which $26.4 million also was sent out.
“While this is not the outcome we hoped for, we recognize the tremendous responsibility we have to the people we serve to make sure their hard-earned tax dollars are spent wisely and appropriately,” said MSF spokesperson Danielle Emerson.
“We continue to focus on securing advanced manufacturing investments, especially across ICE, EV and hybrid vehicles, to position Michigan at the forefront of the mobility revolution as it evolves and adapts to market conditions within this decade and beyond. We will continue doing all we can to bring good-paying jobs and economic opportunity to Michiganders everywhere,” she added.
House Appropriations Committee Chair Ann Bollin (R-Brighton) said the MSF made the right decision in taking a step toward accountability in Michigan’s economic development system.
“In 2022, I voted against sending $175 million in public funds to Gotion because the deal lacked transparency, strong safeguards, and meaningful accountability,” Bollin said. “Two years later, the company has missed construction deadlines, failed to create jobs, and broken the promises made to the people of Michigan. This outcome is exactly why I spoke out against the project from the start.”
The state awarded Gotion the taxpayer-funded incentives through the Strategic Outreach and Attraction Reserve (SOAR) program to build a $2.3 billion battery plant near Big Rapids. The $175 million in incentives were broken up into the CIP award and the site readiness award.
However, community backlash has spurred local recalls and lawsuits that have gummed up the construction timeline, making advancement on the project difficult to impossible.
Almost from the beginning, the argument by former out-of-the-area political figures like Joe Cella and Pete Hoekstra of the China Economic and Security Review Group argued that Gotion’s connection with the Chinese Communist Party was proof that the company was looking to establish a beachhead in rural Michigan for nefarious purposes.
“What did Governor Gretchen Whitmer and the MEDC expect when they collaborated in a ‘deal’ with a company that is deeply tied to the Chinese Communist Party, who is engaged in unrestricted warfare against the United States of America?” Cella wrote in a press release Thursday. “This was a textbook subnational incursion and influence operation. You don’t subsidize these things, you stop them.”
Gotion won its federal court argument that Green Charter Township must comply with a development agreement signed by a prior, recalled board, but the new township leadership has taken their arguments to the U.S. Sixth Circuit Court of Appeals.
Jim Chapman, the former Green Charter Township supervisor who was recalled as part of the Gotion backlash, said this one letter doesn’t signal any finality to a complex business deal with a lot of interlocking issues.
“We’ll see how it all shakes out,” he said.
However, Chapman said it’s sad to see how the poor of this Mecosta County community were swept up by “myopic” and “xenophobic” political messaging to its own financial detriment.
“That plant should be up and running, providing jobs and incomes for our families, and it’s not,” he said. “Instead, the people who are running things have literally bankrupted this township with all of these legal maneuvers.”
Rep. Joey Andrews (D-St. Joseph) told reporters that this proves to him that the MEDC is doing their job.
“We make these deals with these big companies, and the deal is they have to deliver in order to get the money that the taxpayers provide. When they don’t deliver, we got to take that money back. And so obviously it’d be better if they delivered, but we’re taking the money back because they didn’t,” Andrews said.
Andrews said the Strategic Outreach and Attraction Reserve fund showed that companies can’t just be paid a “big bribe” if things like roads and schools are better elsewhere.
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