Gotion, tiny Michigan town square off in court over $2.6B battery factory

• A lawsuit by Gotion Inc. seeks to force Green Charter Township to honor its one-time support for the EV battery maker’s new factory
• The township and Gotion made their cases in a federal appeals court, as the township challenges a lower court ruling
• An earlier decision was made in Gotion’s favor, but the company has taken no steps to prepare to build

Federal appeals judges in Cincinnati heard the first public arguments Thursday in a messy battle between Gotion Inc. and the Mecosta County township that no longer wants the conglomerate to build a $2.6 billion electric vehicle battery factory there.

New leaders Green Charter Township — whose predecessors approved a deal for the controversial mega factory — want to block a deal that would extend municipal water lines to pump 715,000 gallons of water a day into the planned factory.

The township is appealing a lower court’s ruling that it must honor the 2023 development deal while the rest of the case is decided, the latest in a years-long conflict about the project championed by Gov. Gretchen Whitmer.

Thursday’s hearing gave a glimpse into the conflict between the community of 3,200 residents near Big Rapids and the US division of a Chinese company that wants to build the factory.

Scott Hamilton, attorney from Michigan-based Dickinson Wright, appearing for Gotion, said  the company risks losing millions of dollars. 

“We came in, we negotiated a contract with the township,” he told the court. “The township was more than happy to execute that contract and bound themselves contractually to doing certain things … to make this project a reality.”

Related:

• Top 10 subsidies under Whitmer: Michigan spends $900M; firms create 4,200 jobs
• Michigan donors — and Gotion — pumped millions into Trump inauguration
• Big Rapids Twp. eyes life after Gotion; could cash in on state-bought land

Green Charter Township lawyers contended the former township supervisor — ousted because of his support for Gotion — was never authorized to execute a development agreement for the deal,

“We don't think Gotion has … a vested right to any of the damages they're claiming,” said Robby Dube, attorney for Green Charter Township.

The appeals court did not indicate when it would rule on the preliminary injunction and return the case to the US District Court in the Western District of Michigan.

Changing opinions

Thursday’s hearing is the latest in a project that last year became a flashpoint in the presidential election because of Gotion’s ties to China. 

Vice President JD Vance campaigned near the site in August, blasting $175 million in planned incentives promised by Whitmer and other lawmakers. The project is one of the largest inked by Whitmer: Gotion pledge hire some 2,350 workers.

Even though township voters ousted Gotion supporters in 2023 and rescinded support for water access, a deal is a deal, the company’s attorney told judges. 

“We're beginning to gear up and actually begin the construction and do the things necessary to get the construction,” Hamilton said, describing Gotion’s activities around the timing of the township’s moves.

Gotion is also seeking damages from the township for the delays. The company has until 2031 to reach full employment on the site or Michigan can deny incentives or attempt to recoup them.

Gotion has until 2031 to reach full employment at the site to meet the incentive obligations, after the state extended it by one year in 2023.

Hamilton said Gotion can’t yet calculate its losses so far, prompting questions from judges on Thursday.

More considerations

The appeals court hearing comes a day after a Michigan House subcommittee hearing on Gotion. 

Green Charter Township Supervisor Jason Kruse was among speakers who testified before the House Subcommittee on Corporate Subsidies and State Investments. 

“It must be understood that the township did not choose to litigate Gotion,” he told legislators. “Gotion chose to bring litigation against the township that they would like to work in.”

The township operates on 1.25 mills of tax revenue, giving it a very small budget, Kruse told legislators. Published reports indicate the community as a budget of less than $1 million.

The township did not provide Bridge Michigan with legal spending, but a report in the Big Rapids Pioneer Press said Green Charter Township budgeted $230,000 this year to cover litigation expenses. 

That total is up over 3,000% from 2022, when $6,875 was budgeted.

Gotion’s litigation comes amid no other signs of what the company plans, he added.

“We still have very little understanding of what Gotion’s intentions are,” Kruse said.

The Michigan Department of Economic Development — which inked subsidies with Gotion — issued a statement on Wednesday, saying that opponents are missing the mark and emphasizing: 

• The project had local support from Mecosta County and Green Charter Township, along with Big Rapids Township, where the project at one time was going to be co-located.
• The factory would not involve the transfer of national security sensitive technology. 
• Michigan only makes a bid for projects with companies that have already passed federal vetting.

“The MEDC works closely with local partners that in turn work closely with the community to make sure there is support for these projects,” the statement said.

Further, it said, if foreign “dollars will be invested here in the US, the MEDC has an obligation to secure these transformational investments and job opportunities for the Michiganders we serve.”

“We don't think Gotion has … a vested right to any of the damages they're claiming (by the township ending its water system support),” said Robby Dube, attorney for Green Charter Township.