News Story

Battery Maker LG Chem Is Back At Michigan’s State Subsidy Window

$189.1 million this time

An electric vehicle battery company that industry insiders thought would make batteries in Michigan for the Chevy Volt made national news in 2013 for a different reason. That’s when a federal audit reported it was paying employees to watch movies and play cards. The audit reported that LG Chem Michigan hadn’t produced a single battery in the four years since it was awarded $250 million in state and federal government subsidies.

A decade later, a successor company — now known as LG Energy Solutions — is set to receive state subsidies worth another $189.1 million, in a deal officials claim will create 1,200 jobs.

The state of Michigan said LG Energy Solutions was formerly known as LG Chem Michigan. The parent company LG Chem says LG Energy Solutions was founded in 2020. This company is set to receive state cash and tax breaks for another electric vehicle battery operation in Holland, Michigan.

Back in 2010, LG Chem Michigan was celebrated as a company that would help Michigan become the world capital for advanced batteries. But the grand hopes never played out.

Projections in 2010 called for LG Chem Michigan to create 400 jobs. By 2014, it had produced 34. By 2018, it surpassed the 400 projection, saying it had produced 443 jobs. But by then, it was clear Michigan was not going to become a world capital for electric car batteries. Instead, the state stood out for its green-energy failures.

In 2010, then Gov. Jennifer Granholm promoted LG Chem Michigan as part of her effort to diversify the state’s economy through subsidizing alternative energy businesses.

Gov. Gretchen Whitmer has made similar claims. New corporate subsidies for the electric vehicle industry are part of a climate agenda intended to institute “100% economy-wide carbon neutrality” by 2050.

Michigan officials have approved up to $56.5 million in outright state grants for LG Energy Solutions, plus $132.6 million in tax exemptions over 20 years. Whitmer says this time LG Energy Solutions will create 1,200 jobs.

The parent company LG Chem reported having $4.1 billion in operating profits in 2021.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.