Our Next Energy has repaid $3.3M out of $15M taxpayer loan

When Michigan lawmakers announced taxpayer handouts to Our Next Energy, the firm promised to bring a $1.6 billion investment and 2,112 new jobs to Van Buren Township.

It hasn’t so far.

After garnering front-page headlines and much fanfare, the company has laid off much of its staff and is vacating part of its facility. It has repaid about $3.3 million on a $15 million loan from the Jobs for Michigan Investment Fund Loan, which it received in 2023.

Michigan Capitol Confidential obtained the promissory note and loan documents through a records request from the Michigan Economic Development Corporation.

Our Next Energy promised to develop battery packs for electric vehicles. But few people drive EVs; they represent approximately 180,000 of the 9 million vehicles registered in Michigan, according to a lawsuit the state of Michigan filed against oil companies. This year, President Donald Trump’s administration repealed the 2009 Endangerment Finding that fueled the so-called EV mandate. Also, Congress eliminated the federal electric vehicle subsidy.

“ONE aims to pioneer sustainable battery manufacturing practices in order to support American energy independence and position the United States as a leader in disruptive energy storage technology,” a senior official at the Michigan Economic Development Corporation wrote in a memo. “The company intends to bring breakthrough technology to market by establishing a manufacturing facility that will produce cell and EV battery packs.”

On Oct. 5, 2022, the Michigan Strategic Fund Board approved giving the following incentives to Our Next Energy:

• A Critical Industry Program Grant of up to $200 million through the Strategic Outreach and Attraction Reserve Fund, with the expectation the company would spend $1.6 billion to build a battery plant in Van Buren township and renovate its facility in Novi. The company projected that the Van Buren campus would created at least 2,112 jobs.
• An exemption from personal property taxes — the State Essential Services Assessment Exemption — with an estimated value of $21.6 million. It is meant to support $986,326,500 worth of investments at the Van Buren facility.
• A 20-year loan of $15 million to finance a 20-year lease with Ashley Capital, LLC, and related costs for building out the Van Buren facility in Wayne County.

Our Next Energy is repaying the Jobs for Michigan Fund loan and is in good standing, Danielle Emerson, public relations manager at the MEDC, told CapCon in an email.

“Our Next Energy has paid about $3.26 million on its Jobs for Michigan Fund loan, which includes principal, interest, and fees. Repayment began in April 2023 and remains in good standing today. The loan is secured by payments from the landlord, Ashley Equities II, LLC. It's also worth noting this is a different program and agreement from the Critical Industry Program performance-based incentive, which we have previously and repeatedly said will be paused under the current agreement.”

ONE Payments to Michigan by mcclallen

One Promissory Note Cap Con by mcclallen

The Michigan attorney general is trying to claw back $24 million from Gotion, another failed electric vehicle plant that received state support.

Michigan also seeks to claw back $1.2 million from a separate EV automaker, Crain’s Detroit Business reported.

A study published by the Mackinac Center for Public Policy found that only 9% of the jobs announced in major state-sponsored deals from 2000 to 2020 were ever created.

Taxpayer subsidies often fail to create jobs and are hard to claw back, James Hohman, the director of fiscal policy at the Mackinac Center for Public Policy, told CapCon in an email.

“Lawmakers took a lot of money from taxpayers to support elect companies,” Hohman wrote. “It’s tough to get that money back when businesses do not live up to expectations.”