LANSING, Mich. — 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.
These moves were announced in Lansing on Tuesday. They will add up to 4,000 new jobs, while keeping another 1000 employed at an unutilized assembly plant just north of Detroit.
Automaker Orion Township plans to invest up to $4B to convert and expand its assembly plant to produce electric pickups. A joint venture partner, Lansing, will spend $1.5 billion to $2.5 Billion to build a third U.S. cell-plant.
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. It was announced and approved by the Michigan Strategic Fund Board. This package contains a $600million grant for GM and Ultium Cells. The venture is between the carmaker LG Energy Solution (GM) and a $158million tax relief for Ultium. A $66.1 million grant was also approved by the board to a local utility that will help with infrastructure upgrades in townships near the factory.
The factories will start production in approximately two years. GM is still deciding whether Americans are willing to switch from internal combustion engines and battery power.
The Orion plant will join GM’s “Factory Zero” facility in Detroit in building new electric Chevrolet Silverados and GMC Sierra pickups. Barra stated that GM can build 600,000.00 pickup trucks annually if both plants produce trucks in three shifts.
The company has already received a great deal of interest in its trucks from consumers. She didn’t make any 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.
Mark Reuss of GM stated that it was logical to have the battery plant near Michigan’s large production footprint. 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 has announced that it will construct four North American battery cells factories. Although the Lansing announcement was its third, Reuss stated that more might be required as electric vehicle transition continues. The exact location of the fourth factory has not yet been revealed.
“We’ve said four for now, but the adoption rate is rapid,” Reuss said. Additional battery plants will be built in Lordstown and Spring Hill in Ohio as well as 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 (Democrat) said that the GM announcement showed what happens when elected officials on both sides work together. “We showed everyone that we can compete with transformational projects,” she said.
Whitmer explained that these announcements will bring in an additional $510million to sustain production at two Lansing-area GM factories. They are expected to generate over $35 billion of personal income within the next twenty years.
“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.
Michigan could lose a lot of its manufacturing base without the GM investment. The nation and the world will likely shift from vehicles that use internal combustion engines to make electric cars. LMC Automotive, a consulting company, expects that the U.S. will see a rise in EV sales from around 400,000 in 2017 to nearly 2.2 million by 2025. They will still only account for 13% of all U.S. vehicle sales.
Reuss stated that some customers will replace internal combustion trucks with EVs as they transition to electric cars, although that number is hard to predict. GM, he said, doesn’t see the transition moving as fast in heavy duty work trucks. The factories that build both models of the trucks are ready to sell any product, GM said. “That’s the way we’re approaching it, very agile, very much a foot in both camps as we do this transition,” he said.
The United Auto Workers Union is concerned that the jobs of gas engine and transmission workers could soon be eliminated. Electric vehicles are simpler to assemble and have less moving parts.
GM has stated that it is committed to building electric passenger cars by 2035. Ultium was also included in the goal. The company pledges to offer 30 models of electric vehicles worldwide by 2025.