Michigan Demands $23.7 Million Back from Chinese Battery Maker Gotion After Scrapped Plant Deal
By David Shepardson
WASHINGTON, Jan 30 (Reuters) – Michigan’s top prosecutor is seeking to claw back millions in taxpayer dollars from a Chinese electric vehicle battery maker after the company walked away from a major factory project in the state.
Attorney General Dana Nessel on Friday formally demanded Gotion Inc. return $23.7 million in state incentives, declaring the company in default of its agreement. The demand letter gives Gotion 30 days to repay the funds.
The dispute centers on Gotion’s abandoned plan to build a $2.4 billion plant in Michigan to produce components for EV batteries. First announced in October 2022 with promises of 2,350 jobs, the project faced immediate political headwinds due to the company’s Chinese ownership. Gotion did not immediately respond to a request for comment on the demand.
“The company has failed to meet its obligations and has not resolved these issues,” Nessel’s office stated in the letter.
The Michigan Economic Development Corporation confirmed last year that a separate $125 million grant for the project was never paid out, stating Gotion had effectively abandoned its plans. While Gotion initially denied halting the project, its lawyers conceded in a recent court filing that the venture was “no longer viable.”
Background & Broader Impact: The showdown reflects the complex and often contentious landscape for foreign investment in America’s clean energy transition. Gotion, whose largest single shareholder is Germany’s Volkswagen, has argued it remains committed to the U.S. market, including a separate facility in Illinois. However, U.S. lawmakers have raised national security concerns, alleging that Chinese entities maintain “effective control” over the firm.
The collapse also coincides with a market slowdown. Waning consumer demand for electric vehicles has led several automakers to delay or cancel factory projects. Recent policy shifts under the Trump administration, rolling back EV incentives, have further prompted industry retrenchment.
Gotion is currently engaged in a separate legal battle, having sued Green Township in Michigan in March 2024 for allegedly breaching an agreement related to the plant’s construction.
Reaction & Commentary:
“This is a straightforward case of a company failing to deliver on its promises to the people of Michigan,” said Michael Thorne, a policy analyst at the Great Lakes Economic Institute. “The state is right to protect its investment. It sets a necessary precedent for accountability in these large-scale development deals.”
“It’s about time. We never should have been handing out millions to a company with such clear ties to the Chinese Communist Party’s strategic industries,” argued Sarah Chen, a former trade official and frequent commentator. “This wasn’t just a bad business deal; it was a security risk from day one. Every dollar needs to come back, with interest.”
“The situation is unfortunate for the promised jobs, but it’s a symptom of a volatile market,” noted David Park, a manufacturing consultant in Detroit. “Between shifting federal policies and softening EV demand, the business case for these giant new plants is changing faster than the paperwork can be signed.”
“This legal fight misses the bigger picture,” countered Lisa Rodriguez, an advocate for green manufacturing. “We’re chasing back pennies while losing the dollars we need to build a domestic battery supply chain. The real failure is a lack of coherent national strategy.”
(Reporting by David Shepardson in Washington; Editing by Chizu Nomiyama)