Gotion High-tech, China's third-largest manufacturer of electric-vehicle batteries, has made considerable advancements in its expansion in the US, despite the rising competition between the US and China over technology.
On October 5, the local government approved the Chinese company's proposal to construct a $2.4 billion facility in the US.
The plant, which will be located near Big Rapids, Michigan, aims to create 2,350 high-tech jobs with an average annual salary of $61,995 over the next decade, according to the state application.
It is projected that the facility will produce up to 150,000 tons of cathode material and 50,000 tons of anode material per year.
The investment plan in Michigan would save Gotion about $13 million in property taxes annually, according to the application.
Founded in 1998 and headquartered in Hefei, China, Gotion engages in the R&D, production, and sales of lithium iron phosphate batteries (LFP). It established a subsidiary in the United States in 2014 in order to concentrate on research and development in Fremont, California, and Cleveland, Ohio.
In December 2021, Gotion, whose largest stakeholder is Volkswagen, revealed that it had entered into a supply arrangement with a major publicly traded US manufacturer. The arrangement involves the supply of 200 GWh of LFP batteries between 2023 and 2028, which may be a major consideration in the Chinese company's efforts to localize the production and supply of LFP batteries.
“The facility will serve our finished goods manufacturing in North America and possibly have enough capacity to sell these two critical components to other North-America based battery manufacturers,” Chuck Thelen, the company’s vice president of North America operations, said in an emailed statement.
On the other side, Gotion was attracted to Michigan because the state, which has traditionally been a center for auto manufacture in the US, is now actively courting EV-related enterprises, particularly those involved in the production of batteries.
Michigan beat Texas, Georgia, Kentucky, South Carolina, Illinois, and Ohio for the right to host the Gotion High-tech Battery Plant by providing more enticing and adequate incentives.
The Wolverine State is also successful in luring domestic manufacturers to settle there. At the start of the year, General Motors began construction on the third battery cell plant of Ultium, its battery joint venture with LG Chem, in the state. The state has contributed a total of $666.1 million for a series of GM's projects. In June, Ford said it would invest $2 billion into three EV assembly plants in Michigan. The state contributed an additional $100.8 million.
On the same day that Gotion was given the green light, Our Next Energy was also granted permission to construct a facility there. Starting in late 2024, the US company's $1.6 billion plant will provide 2,100 employment opportunities.
Michigan will provide financial incentives of around $715 million for the Gotion complex and $237 million for the Our Next Energy site.
Governor Gretchen Whitmer has described Gotion’s investment as the biggest-ever economic development project in Northern Michigan. "It will shore up our status as the global hub of mobility and electrification,” said the Governor. "We will work with anyone and compete with everyone to keep bringing supply chains of batteries, chips, and electric vehicles home to Michigan.”
Gotion's foray into the US comes at a time when EV battery production is gaining momentum in the tech-savvy country. In addition to the growing demand for EVs driving the battery industry, new and expanded federal tax incentives in the recently passed Inflation Reduction Act (IRA) are widely expected to drive battery demand and domestic production to a considerably higher level in upcoming years.
Consequently, major international EV battery makers, including SK Innovation, LG, Samsung, and Panasonic, have or are in the process of deploying in the US.
In September, Ford Motor broke ground in Tennessee on an electric truck and lithium-ion battery plant in partnership with SK on, a subsidiary of South Korea's SK Innovation. Samsung SDI is working with Stellantis to build a $3.1 billion battery and module production facility in Indiana. A subsidiary of Panasonic Holdings announced in July plans to build a roughly $4 billion battery manufacturing plant in Kansas, one of Tesla's production centers.
Unlike these Japanese and South Korean competitors, Chinese battery manufacturers may find it difficult to access the US market if the conflict between the two sides escalates. Bloomberg News reported in August that CATL had delayed a decision on its planned North American factory due to the visit of US House Speaker Nancy Pelosi to Taiwan, which strained relations between Beijing and Washington.
According to Gotion's first-half financial report, the company's revenue climbed by 143.24% year-over-year to 8.638 billion yuan, while its net income increased by 34.15% year-over-year to 64.62 million yuan. Domestic market revenue accounted for 90% of total sales, reaching 7.866 billion yuan, a rise of 132.53% year-over-year, while international market revenue increased by 358.28% to reach 772 million yuan.
Gotion wants to deploy more capacity outside of China by 2025 in order to accommodate the growing demand from foreign customers. The company stated in a statement posted on June 27 that it wants to construct a total battery production capacity of 300 GWh in three years, with 100 GWh located abroad.
The company's first foreign battery plant in Gottingen, Germany, will be completed by the end of this year, and production will commence as early as September of next year.
Data from SNE Research showed that in the first half of the year, Gotion's LFP batteries installed capacity was 5.8 GWh, with a market share of 2.9%, an increase of 1% year-over-year, and a global ranking of eighth.
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