autoevolution
 

Of GM's $7 Billion Investment in Michigan, $824 Million Will Come From Taxpayers

States also compete against each other. To attract investments, tax breaks and incentives are all they got. An excellent example of how that works comes from GM and its recent investments in Michigan. Of the $7 billion the carmaker wants to invest there, $824 million will come from taxpayers.
Ultium Cell Plant in Lansing, Michigan 7 photos
Photo: GM
Ultium Cell Battery PackUltium Cell ChassisMary Barra announces GM investment in MichiganMary Barra announces GM investment in MichiganMary Barra announces GM investment in MichiganUltium Cell Plant in Lansing, Michigan
According to Automotive News, that amount includes a $666.1-million direct taxpayer grant provided by the SOAR (Strategic Outreach and Attraction Reserve) fund. Curiously, it was Ford who helped GM get this incentive after it announced it would build Blue Oval City in Tennessee.

The $5.6-billion investment in that State is largely credited to the incentives Ford received to establish its new plant there. Afraid of losing new factories, the Michigan government created the SOAR fund by separating $1 billion from the $8 billion it received from the federal government as discretionary federal COVID stimulus funds. GM getting $666.1 million of that $1 billion shows how much priority Michigan gave to the automaker.

It makes sense that this is the case. With the automotive industry making a fast shift to electric cars, Michigan would be left with old factories that would either need to be refurbished to produce EVs – as Volkswagen did with Zwickau – or would just be closed. Flint’s experience when GM closed its factory there in 1999 is something Michigan is not willing to see happening again.

With these incentives, the State ensured it would receive $7 billion both from GM and LG Energy Solution. These companies will build the third Ultium battery plant in Lansing. The other two are in Lordstown, Ohio, and Spring Hill, Tennessee.

Most of GM’s investment will be applied to the Orion plant: $4 billion will be invested there to add 3 million square feet (278,709 square meters) of manufacturing space there for electric pickup trucks. Both projects will increase GM’s current Michigan workforce by 4,000 people.

These taxpayers will probably thank that their taxes were well spent in giving them these jobs. Considering the chain reaction that these direct jobs have on the economy, they’re probably just the tip of the iceberg. The question is how sustainable incentives are and what all other taxpayers will think about them in the long term.
If you liked the article, please follow us:  Google News icon Google News Youtube Instagram X (Twitter)
About the author: Gustavo Henrique Ruffo
Gustavo Henrique Ruffo profile photo

Motoring writer since 1998, Gustavo wants to write relevant stories about cars and their shift to a sustainable future.
Full profile

 

Would you like AUTOEVOLUTION to send you notifications?

You will only receive our top stories