Nathan Bomey and Sven Gustafson
Michigan Business Review

Michigan is becoming the nation's leader in advanced battery production got a major jolt today as officials announced investments in four new operations that would employ several thousand workers.

The four projects, collectively worth about $1.7 billion, illustrate the state's burgeoning hold on the vehicle battery production market as the world's top automakers invest billions in electric vehicles and lithium-ion batteries.
Michigan economic development officials approved tax incentives for battery production operations for:

• Watertown, Mass.-based A123Systems Inc., which has existing operations in Ann Arbor and Novi. The firm, which has an agreement to supply batteries for Chrysler's electric vehicles, will invest more than $600 million in a new battery plant in Livonia. This specific project will create some 5,000 jobs.

A123, which is also pursuing $1.84 billion in loans from the U.S. Department of Energy to build U.S. battery factories, had already announced plans to invest in battery plants employing 14,000 workers. In November, the company won $10 million under the state's Centers of Energy Excellence research and development program. It says it will base that program out of the new Livonia facility and work in collaboration with the University of Michigan and Michigan State University.

• KD Advanced Battery Group LLC, a joint venture between Midland-based Dow Chemical Co., Kokam America Inc. and Townsend Ventures LLC. The firms are joining together to build a $665 million, 800,000-square-foot battery manufacturing plant. The plant will employ some 885 workers and deliver batteries for electric vehicles and hybrids.

• Korean firm LG Chem and Troy-based subsidiary Compact Power, in partnership with General Motors, announced they would invest $244 million to jointly establish a 660,000 square-foot lithium-ion battery cell manufacturing facility. The facility would include cathode, anode, separator and assembly lines and will create up to 443 new jobs over the next five years, according to state documents.

GM in January announced it had selected LG Chem to supply lithium-ion cells for the Chevrolet Volt, an extended-range electric vehicle to be released in November 2010. The Volt will be able to travel 40 miles on a single charge of electricity.

Business Review first reported last month that Compact Power was planning an expansion in Troy.

• Milwaukee-based Johnson-Controls-Saft Advanced Power Solutions LLC. The firm expects to invest $220 million in an advanced battery production plant that will employ 498 workers. JCS recently landed a deal with Ford Motor Co. to supply batteries for Ford's first plug-in hybrid vehicle.

"The state's created an enviroment where battery businesses are welcome, and electrification technologies are welcome," said University of Michigan engineering professor Ann Marie Sastry, who has her own Ann Arbor-based vehicle battery startup called Sakti3. "Michigan has taken a leadership role."

The announced investments come after Gov. Jennifer Granholm last week signed two additional tax credits into law for battery cell R&D and manufacturing, increasing the credits available to companies to $555 million. The incentives stipulate that battery manufacturers can qualify for up to $25 million in incentives a year for four years, or $300 million altogether, provided they open a plant and create at least 300 jobs in the state.

"Thanks to the most aggressive economic strategy of any state in the country, Michigan, the global center of automotive research and development, is positioned to lessen the nation's dependence on foreign oil and become the advanced battery capital of the world," Granholm said in a news release.

Other tax incentives totaling up to $225 million target research and manufacturing of advanced batteries.

Granholm and lawmakers hope the tax credits strengthen Michigan's case for a large share of $2 billion in federal stimulus money for energy projects.

Ford Motor Co. in February won $55 million in refundable credits from MEDC to help it with its strategy to bring four electric vehicles to the market by 2012. GM also won up to $160 million under the program and $6.8 million in separate tax incentives to locate a battery pack assembly plant in Southeast Michigan.


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