Michigan’s efforts to solidify its place in the electric vehicle supply chain have hit a major setback. The state has officially terminated its agreement with Gotion Inc., a California-based subsidiary of China’s Gotion High-Tech, after the company failed to advance a $2.36 billion EV battery plant near Big Rapids. The collapse of the project has reignited debate over U.S.-China industrial ties, the accountability of state incentive programs, and the economic direction of Michigan’s manufacturing future.

State officials are now demanding $23.6 million in incentive clawbacks after determining that Gotion had defaulted on its economic development obligations. The Michigan Economic Development Corporation (MEDC) stated that “no eligible activities” occurred on the property for over 120 days, a clear violation of grant terms. The state will also reclaim $26.4 million in unspent funds.

From Promise to Fallout: How the Project Unraveled

When first announced in 2022, the Gotion plant was touted by Governor Gretchen Whitmer as a cornerstone in Michigan’s clean-energy transition, projected to create over 2,000 jobs and manufacture key EV battery components such as cathodes and anodes. Backed by $175 million in state incentives, the initiative was expected to restore the state’s industrial edge amid global competition for EV investment.

Yet, the project soon encountered turbulence. Community resistance surged in Green Charter Township, where residents cited environmental and geopolitical concerns over Gotion’s Chinese ties. Local discontent grew so strong that five pro-project township officials were recalled by voters in 2023. Simultaneously, ongoing lawsuits and political scrutiny — including allegations of forced labor and Chinese Communist Party affiliations — further stalled progress.

By mid-2024, the project’s stagnation had become untenable. The MEDC’s Sept. 17 default notice gave Gotion 30 days to rectify violations. That deadline expired on Oct. 17, sealing the project’s fate.

Political Tensions and National Implications

The collapse of the Gotion deal extends beyond Michigan’s borders, highlighting Washington’s growing skepticism toward Chinese-linked investments in sensitive industries. Republican Rep. John Moolenaar, who chairs the House Select Committee on China, had led the campaign against the project. His proposed legislation — later signed into law by President Donald Trump — barred Chinese-affiliated firms from receiving EV tax credits under the Inflation Reduction Act.

For Moolenaar, the project’s termination marked a political victory. “The people of Green Charter Township can finally move on from Gotion’s lies and broken promises,” he said in a statement. But the development leaves Michigan facing a strategic dilemma: how to attract new industrial investment without igniting political backlash or risking economic exposure to foreign entities.

What’s Next for Michigan’s EV Strategy?

The end of the Gotion project exposes a broader challenge in America’s race to localize EV supply chains — balancing industrial ambition with political risk. Michigan, long the heart of U.S. auto manufacturing, now finds itself recalibrating its strategy amid tariff pressures, shifting trade policy, and investor caution.

As other automakers accelerate battery production in the South and Midwest, the state must determine how to rebuild credibility with both domestic and international investors. With federal policy increasingly favoring “friendshoring” and U.S.-based manufacturing, Michigan’s next steps will be pivotal in defining whether it remains a leader in the clean-energy transition — or falls behind in the shifting global order of EV production.