Holland and Big Rapids Consider Developments in Battery Manufacturing

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Aadvanced automotive battery suppliers are considering a pair of cities in western Michigan for new or expanded manufacturing facilities, MiBiz has learned.

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LG Energy Solution Michigan Inc. has secured $ 1.36 billion in funding to support the expansion of battery manufacturing in North America, at least part of which will occur in Holland, the Detroit News reported last week.

Meanwhile, officials from the Jackson-based utility Energy consumers confirmed to MiBiz that the company is in talks with state and local economic development agencies about an as-yet-undisclosed project considering a site in Big Rapids.

Related: Consumers, DTE Seek Special Economic Development Tariffs

Consumers Energy Senior Vice President and Chief Customer Officer Brian Rich confirmed that Big Rapids is one of several Michigan cities where the utility is aware of potential battery manufacturing projects and that at least one project is under consideration.

“These projects are all confidential and we are under an NDA with the state. Big Rapids is part of our service territory, and in this particular proposal, we’re working with MEDC and The Right Place on a response, ”said Rich.

Sources noted the location of Big Rapids on the US 131 corridor and the presence of Ferris State University, which has strong engineering and manufacturing technology programs, as a potential draw for the company.

The utility revealed to state regulators last month that it was aware of 10 “active electric vehicle supply chains and other high-tech projects” being planned in Michigan, which are worth about $ 64.8 billion. of potential investment dollars and approximately 21,000 jobs. Consumers and ETTD energy, the two largest state-owned investor-owned utilities, are seeking fast-track approval for special electricity tariffs to attract these types of battery factories (see page 18).

Holland ready to invest

As LG Energy Solution, state and regional utilities and economic development leaders remain low profile on local expansion, signs point to growth at LG existing Dutch installation.

In regulatory filings in South Korea, LG Energy Solution Michigan has revealed that it has been approved for $ 1.36 billion in funding through a capital increase that will be issued gradually until 2024.

“Through the capital increase, we plan to use it as an investment fund to meet the increased demand for electric vehicle batteries and (energy storage systems) in the North American market. We plan to invest billions of dollars, ”according to the file.

The parent company LG Corp. plans to invest $ 4.5 billion by 2025 to increase production capacity in North America to 70 gigawatt hours while creating approximately 10,000 jobs as part of its Project Green Field initiative.

A Forbes A report from March this year said that, as part of the Green Field project, LG Energy Solution would add new facilities to its existing Dutch site that are expected to be operational by 2023.

The company reportedly confirmed last week that part of the investment will go to expanding its plant in the Netherlands. The spotlight is now shining the spotlight on a 40-acre piece of land LG owns next to its existing manufacturing facility.

A comment from LG Energy Solution was not available at press time.

Jennifer Owens, president of an economic development company Lakeshore Advantage Corp., said she could neither confirm nor deny whether her organization – which serves both Allegan and Ottawa counties – was helping facilitate a project to expand LG’s facilities in Holland. A spokesperson for the Dutch Council for Public Works issued a similar statement.

Owens said the company has found suitable accommodation in Holland.

“LG Chem is a major employer in our region,” said Owens MiBiz by email. “They have consistently exceeded their job creation and investment commitments on past expansion projects.”

“We are very grateful to have such an important facility focused on the future of the automotive industry in our region,” she added. “Our community will do everything possible to welcome and support their continued growth and investments. “

LG initially announced its $ 303 million, 650,000 square foot facility in the Netherlands in 2010. The company was attracted by the Netherlands’ low electricity rates, a highly skilled workforce and a relative proximity to the customer. General Motors. The company increased its production in 2012.

The Michigan Economic Development Corp. was unable to offer information on LG’s possible Michigan expansion, but a spokesperson said MiBiz in a statement: “We are proud to remain a global hotbed of opportunity in the future of mobility and electrification. Michigan has a strong and long-standing relationship with LG Energy Solution, and we remain grateful for the company’s decade-long investment in manufacturing and R&D in the state.

Looking for a victory

Randy Thelen, President and CEO of the regional economic development organization The good place inc., noted that Michigan’s major automakers are planning investments of around $ 150 billion in electric vehicles and batteries in the coming years.

“This is an almost unprecedented level of investment for this industry,” Thelen said. (The Right Place doesn’t confirm whether any potential projects are being negotiated, Thelen said with reference to Big Rapids.) There’s a huge amount of capital that’s being deployed. Certainly, western Michigan has a lot to offer.

Thelen would know: he led the Lakeshore Advantage team that mobilized in 2009 to attract into the LG Chem factory and also secured a $ 175 million investment in Holland from Johnson Controls Inc. to start manufacturing. of lithium-ion batteries, a company that was subsequently established. as Clarios.

Both projects were also backed by hundreds of millions of dollars in federal and state incentives aimed at developing the advanced battery industry, a move criticized by some critics given that electric vehicles made up only a fraction of industry at the time and amid the concerns of the sector. was already overcapacity.

While electrified vehicles currently represent a tiny fraction of annual new vehicle sales, their trajectory and planned investments by automakers clearly show that electric vehicles are the future of the industry.

According to IHS Markit, electric vehicles accounted for 3 percent of light-duty vehicle production in North America in 2020, compared to 43 percent that were powered by internal combustion engines and 47 percent that were some form of hybrid. This percentage of electric vehicle production is expected to increase steadily to reach 16% by 2025 and 36% by 2030.

This summer, President Biden implored automakers to position themselves to make electric vehicles for at least half of all new vehicle sales by 2030. While the target may be ambitious, Ford, GM and Stellantis have all announced that they are working to ensure that electric vehicles account for 40 to 50% of sales in the United States by 2030.

Electric vehicles accounted for a record 1.8% of registrations in the United States in 2020, according to IHS Markit. Forecasts put that number at 3.5% in 2021 and over 10% by 2025.

Indeed, the state continues to fight to retain, develop and attract new projects that feed the emerging market for electric vehicles.

Michigan experienced what economic developers described as a major setback this fall when Ford, along with partner SK Innovation Co., announced it would invest $ 11.4 billion and create 11,000 jobs in Tennessee and Kentucky. to build facilities manufacturing both electric vehicles and batteries.

The loss sparked great concern from economic development organizations across the state, which immediately focused on initiatives to create large, ready-to-go sites and additional incentives to court these large projects.

“(Michigan) won’t be the de facto investment destination – it just won’t happen,” said Mike Wall, director of automotive analysis at IHS Markit. “We have seen this over and over again with some of the investment decisions that have been made. This is not to hurt regional investment organizations and so on that are trying to attract these investments. It’s just a competitive environment.

As the electrification of vehicles accelerates steadily, it is urgent to bring in key suppliers for this space in Michigan.

“Look at all the engines and transmission plants (in Michigan),” Wall said. “It’s a lot of people and work. It’s not going to go away overnight, but it will be threatened at a much faster rate, and we want to have jobs for these people. We want to be able to attract investment.

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