Chinese EV battery maker sues Michigan township over $2.4B factory plan

Chinese EV battery maker Gotion Inc. sues Michigan township over $2.4B factory plan, alleging breach of contract. 🚗💼 #EV #lawsuit

Chinese battery manufacturer Gotion Inc. is suing the township where it plans to build a $2.4 billion electric vehicle battery factory, alleging breach of contract in relation to the project.

The company filed a lawsuit Friday against Green Township, which is just north of Big Rapids, three hours northwest of Detroit, in U.S. District Court Western District of Michigan, claiming that in November it “abruptly reneged” on contractual obligations established for the project in 2023.

“The (Green Township) Board gave no justifiable reason for its sudden refusal to honor its contractual obligations,” the lawsuit said.

“The only thing that changed between October and November was the composition of the Township’s Board, most of whose members are now ardently opposed to Gotion’s project,” according to the complaint, written by Gotion attorney Ashley Chrysler with Warner Norcross + Judd LLP.

At immediate issue in the federal lawsuit is the construction of water infrastructure for the project, which is promised to bring 2,350 new jobs and dramatic change to the rural community.

Township board members aim to block an extension of a water line running from Big Rapids through its boundaries to serve the plant despite previously entering into a development agreement allowing it. Water is “critical” to the success of the factory, which will require up to 715,000 gallons per day to operate, according to the lawsuit.

The broader issue is general opposition to the plant by newly elected township board members who replaced pro-factory board members in a November recall election.

“To prevent the Township’s sudden recalcitrance from unraveling an endeavor already years and millions of dollars in the making, this Court should order the Township to comply with its obligations under the parties’ agreement by, among other things, reinstating the resolution to approve the connection of the City’s water systems to Gotion’s project,” the lawsuit said.

The Detroit News first reported that the lawsuit was filed Friday.

Green Township has 21 days after the filing to answer the complaint. Crain’s Detroit Business made multiple requests for comment to the township.

“It’s unfortunate that Gotion has had to resort to litigation to get the township to comply with their obligations under the agreement,” Chuck Thelen, vice president of Gotion’s North American operations, said in a statement. “We’re unable to comment further since this is now an ongoing legal matter.”

Since the project was announced in October 2022, it has been wrought with controversy. Critics have said the factory will do more harm than good to the tight-knit community, while conspiracists have called it a Chinese Communist takeover plot.

Gov. Gretchen Whitmer and economic developers have heralded the project as a once-in-a-generation opportunity to grow wealth in a poor community. Other politicians, primarily Republicans, have raised national security concerns over doing business with a company tied to China.

A month ago, Gotion began cutting down trees at the factory site, which spans 270 acres of land purchased by the company for $24 million, marking the first physical progress on the project. A week later, it announced a new office in downtown Big Rapids, where it intends to have 200 employees.

Gotion Inc. is a subsidiary of China-based Gotion High-Tech Co. Ltd. that was established in California in 2014. Volkswagen is the company’s largest shareholder, with a 24.7 percent stake. Chinese national Li Zhen, who is the founder and president of the company, is the next largest shareholder at 13.6 percenet.

The plant near Big Rapids would produce up to 400,000 tons of cathode material annually for lithium-ion EV battery packs assembled in Illinois, where Gotion is planning a $2 billion factory.

Michigan officials approved $715 million in incentives for the factory, including $175 million of funding from the Strategic Outreach and Attraction Reserve and a 30-year Renaissance Zone property tax abatement valued at $540 million.

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