GM to spend nearly $7B on EV, battery plants in Michigan

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General Motors is making the largest investment in company history in its home state of Michigan, announcing plans to spend nearly $7 billion to convert a factory to make electric pickup trucks and to build a new battery cell plant.

The moves, announced Tuesday in the state capital of Lansing, will create up to 4,000 jobs and keep another 1,000 already employed at an underutilized assembly plant north of Detroit.

The automaker plans to spend up to $4 billion converting and expanding its Orion Township assembly factory to make electric pickups and $1.5 billion to $2.5 billion building a third U.S. battery cell plant with a joint-venture partner in Lansing.

GM CEO Mary Barra said the investment would make Michigan “the epicenter of the electric vehicle industry.”

The state’s economic development board on Tuesday approved $824 million in incentives and assistance for Detroit-based GM. The package was unveiled and authorized by the Michigan Strategic Fund Board. It includes a $600 million grant to GM and Ultium Cells, the venture between the carmaker and LG Energy Solution, and a $158 million tax break for Ultium. The board also approved $66.1 million to help a local electric utility and township upgrade infrastructure at the battery factory site.

Both factories are scheduled to start producing in about two years, as GM rolls the dice on whether Americans will be willing to convert from internal combustion engines to battery power.

The Orion plant will join GM’s “Factory Zero” facility in Detroit in building new electric Chevrolet Silverados and GMC Sierra pickups. When both plants are making trucks on three shifts, GM will have the ability to build 600,000 electric pickup trucks per year, Barra said.

Already the company is getting great interest in the trucks from consumers, she said, without giving any numbers of reservations.

The announcement is a critical win for Michigan, which lost out on Ford Motor Co.’s $11 billion investment in three battery plants and a new vehicle assembly plant that went to Kentucky and Tennessee.

GM President Mark Reuss said it made sense for GM to locate the battery factory near its large manufacturing footprint in Michigan. The company’s ability to quickly convert existing factories such as Orion to build solely electric vehicles is a competitive advantage over companies that need to costly build brand-new plants, he said.

“We’re going to take advantage of that from an assembly plant standpoint, and then we’re going to put the new cell plants in the proximity to supply that footprint,” Reuss said.

GM says it will build four battery cell factories in North America. The Lansing announcement is its third, but Reuss said more may be needed as the transition to electric vehicles continues. The location of the fourth plant has not been announced.

“We’ve said four for now, but the adoption rate is rapid,” Reuss said. The other battery plants are being built in Lordstown, Ohio, and Spring Hill, Tennessee.

In Michigan, officials realized the critical nature of winning the GM investment after losing out on Ford’s announcement last year.

Gov. Gretchen Whitmer, a Democrat, said the GM announcement shows what can happen when elected officials from both sides of the aisle work together. “We showed everyone that we can compete with transformational projects,” she said.

The announcements, which include another $510 million investment to maintain production at two other Lansing-area GM plants, will generate more than $35 billion in personal income during the next 20 years, Whitmer said.

“The economic well-being of our state isn’t a partisan matter. High quality jobs don’t have party affiliations,” Republican Senate Majority Leader Mike Shirkey said.

Without the GM investment, Michigan risked losing a big chunk of its manufacturing base as the nation and world are expected to shift away from the vehicles it now makes that are largely powered by internal combustion engines. The consulting firm LMC Automotive expects U.S. EV sales to grow from just over 400,000 last year to 2.2 million in 2025. Even then, they still will be only about 13% of total U.S. new vehicle sales.

GM didn’t have much choice in putting a battery plant in Michigan simply because of the number of factories it has in the state, said IHS Markit Principal Automotive Analyst Stephanie Brinley. More electric vehicle announcements will come in the future, she said, likely destined for areas close to GM’s auto assembly plants.

“If Michigan didn’t work, they wouldn’t put it here,” Brinley said. “But Michigan works because they have decades of investment here.”

Reuss said that as the transition to electric vehicles starts, some buyers will substitute EVs for internal combustion trucks, but that number is difficult to estimate. GM, he said, doesn’t see the transition moving as fast in heavy duty work trucks. But the company is ready for whatever consumers want to buy, with factories building both versions. “That’s the way we’re approaching it, very agile, very much a foot in both camps as we do this transition,” he said.

Members of the United Auto Workers union are worried that jobs making gas engines, transmissions and other internal combustion vehicle parts eventually could be lost, since electric vehicles have fewer moving parts and are easier to assemble.

GM, which has set a goal of building only electric passenger vehicles by 2035, said that together with Ultium it considered multiple states for the new battery factory. The company has pledged to have 30 electric vehicle models for sale globally by 2025.

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8 thoughts on “GM to spend nearly $7B on EV, battery plants in Michigan

    1. It’s not going away. GM plans on converting its entire offering to electric-only in the 2030s. At some point, the Fort Wayne plant will likely also be converted to make electrics.

  1. “will generate more than $35 billion in personal income during the next 20 years, Whitmer said.” – How the heck do they generate this information. That’s seems highly unlikely and I’m pro EV, and currently own Volt.

    1. Math: $35 billion / 20 years = $1.75 billion per year. Given that those jobs are union jobs, I think it’s not unreasonable to figure that the pay and benefits are close to $80-100,000. The numbers might be puffed up or optimistic by 10-20%, but they’re not off by double. At $100K, they’re suggesting 17,500 full time equivalent jobs associated with these announcements.

      5,000 jobs are mentioned in the article, plus however many jobs are in the existing two Lansing plants that will be “maintained” by additional investment (approximately 4,200 according to online records); that’s 9,200 direct jobs. Add GM salaried support staff housed in different locations, plus however many outside construction, maintenance, and support jobs will be involved in building the new plant(s), plus ongoing spinoff jobs at local suppliers and contractors (maintenance, repair, trucking/transportation, warehousing, etc.). It’s not crazy to suggest a total of 17,500-20,000 jobs would be supported by these plants.

  2. Chris B. – Your calculations are in the ballpark, and they do even not include the residual economic benefits when those salaries are then spent in the local market on everyday consumer spending. This is a huge win for Michigan, and makes whatever incentives the state offered well worth it. Hoosier economic development leaders should be wondering why Indiana is being left in the dust consider both this deal and the recently announced Intel deal in Ohio. Indeed, what was the last big new deal that Indiana landed?

    1. Indiana needs to start focusing on enhancing quality of life rather than incentives. Places like Pittsburgh, Minneapolis, Austin, and Columbus are eating Indy’s lunch. Meanwhile, our State Legislature keeps passing pre-emption laws as a way to punish Indianapolis and make people not want to live here with a visceral social agenda.

    2. A T. – Good point, and I actually think it’s a combination of both economic incentives and quality of living that matter. Indiana falls short on both accounts because of its frugal fiscal mindset.

    3. Thanks Brent. Back in the dark ages, when I studied economics, it was called “the multiplier effect” and large-item, large-scale manufacturing had the highest such multiplier.

      I agree that my back of the envelope estimate is probably a little high on wages and low on number of jobs. 1:1 direct to spinoff jobs is low for this kind of factory and investment when you consider also the capital equipment manufacturers.