Saturday, May 25, 2024

The China-linked EV battery mega factory dividing a US township

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Set among green rolling hills and tall pines, Lori Brock’s storybook farm encapsulates northern Michigan. A five-day-old mare bucks around a pen, while small black pigs roam through a barn and donkeys graze in fields bordered by white fences.

It is a bucolic way of life in Green Township, but one that Brock and many of her neighbours believe could be threatened by an unlikely adversary – China’s Communist party.

Just south of her property, a company called Gotion is moving forward with a huge $2.4bn, 2m sq ft (186,000 sq metre) plant that would produce lithium battery components for electric vehicles (EVs). It is a US-based firm but its parent company is Chinese.

Brock and her neighbours say they are in a fight to preserve Green Township’s rural character and stave off the “national security risk” of a Chinese company. They insist they are on the brink of derailing the project.

Across the US, anti-China sentiment is threatening to disrupt the transition to EVs. That transition is partly funded by President Joe Biden’s Inflation Reduction Act, but many of its projects – which also aim to revive struggling rural economies – are in Republican districts and are powered by Chinese funding, which is opposed by some residents.

In this context, Green Township – with a population of 3,200 – forms just one part of the broader economic conflict between the US and China. With some analysts convinced that Beijing is winning the race to store clean energy, the US is in the difficult position of needing to embrace China’s technology. On Tuesday, Biden announced a 100% tariff on Chinese-made EVs as part of a package of measures designed to protect US manufacturers from cheap imports.

The stakes are especially high in Michigan, which is attempting to preserve its standing as the world’s auto capital in the EV era. The state’s Democratic governor, Gretchen Whitmer, and legislative leaders, including many Republicans, pulled together billions of dollars in tax incentives to ensure companies invest there. Gotion itself is expected to receive about $715m in state incentives.

‘They messed with the wrong rednecks’

Gotion’s plans surfaced in late 2022, igniting an acrimonious fight that has run ever since, with alleged death threats, claims of sabotage, smashed mailboxes and local officials who supported the project being voted out.

Jim Chapman, the township’s supervisor who backs Gotion’s plans, has spoken publicly about the threats he received. He said they involved references to the Second Amendment, the right to bear arms, and threats to send over the “Michigan militia”, a possible reference to the self-styled anti-government militia grouping.

Chapman, a former police officer, said he began attending township meetings armed and wearing a bulletproof vest.

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Others against the mega factory say they too received death threats, but people on both sides are reluctant to reveal details.

Gotion’s supporters dismiss fears of communist influence as far-fetched and believe that opposition to the plans was fomented by outside, Donald Trump-aligned, political forces who don’t want to see Governor Whitmer “score a win”. In June last year, Trump told a rally in the state the push for EVs is “killing Michigan and it’s a total vote for China”. Mecosta County, where Green Township lies, has the fifth-highest poverty rate in the state, and the plan’s supporters view Gotion as an economic boon.

The project’s opponents, who established the Mecosta Environmental and Security Alliance (MESA), call themselves “No-Gos”, and question why the new generation of EV projects are not being built in the region’s cities instead.

“We don’t want smokestacks here,” Brock says. MESA believes industry and government officials perceive rural communities as financially “weak” and filled with a “bunch of hicks only interested in raising horses”. Another resident, Ormand Hook, says: “They messed with the wrong rednecks.”

‘Been waiting a long time for an opportunity like Gotion’

Just south of Green Township lies Big Rapids. In her fudge and gift shop there, Carlleen Rose sees vacant storefronts and young people leaving because of a lack of good jobs. The 2,300 positions that Gotion says would pay an average of $24 an hour could be a desperately needed economic antidote.

“We’ve been waiting a long time for an opportunity like Gotion to come,” Rose says. “The sheer number of people who would be employed by this company is incredible.” The running joke, she adds with a scoff, is that the Chinese will send communists to spy on her fudge recipes.

MESA, by contrast, scoffs at the notion that China is not a threat. The fudge recipe joke is “frothing with ignorance”, says Bruce Baker, an accountant and MESA spokesperson.

Reflecting on the division the plans have created, Rose says: “What has happened to this community – it just makes me so sad.”

Big Rapids, Michigan. The Gotion factory would create more than 2,000 positions in the area. Photograph: Roberto Galan/Alamy

A question of priorities

Founded in China in 2006, Gotion established its US subsidiary in California in 2014, and its US board is about equal parts German, American and Chinese. The parent company’s articles of association require it to “carry out party activities in accordance with the constitution of the Communist party of China”. Gotion already has operations in California and Ohio, and it has told residents its North American operation will have nothing to do with communism.

Gotion’s US subsidiary did not respond to a request for comment for this story, but Chuck Thelen, Gotion’s vice-president of North American operations, has engaged with local communities by holding a series of virtual town hall meetings. He told one in April last year: “Despite what any current politicians may say, there is no communist plot within Gotion to make Big Rapids a center to spread communism.”

What is clear is that the company is rapidly expanding its overseas footprint. In 2023, its revenue from outside China reportedly increased by 116% to 6.4bn yuan ($884m), thanks in part to its partnership with western brands such as Volkswagen.

Michael Dunne, the founder of Dunne Insights, an EV consultancy, says Gotion is a “very impressive” and “genuinely privately owned company” that wants to grow by expanding internationally, away from the crowded competition in China, which is dominated by battery giants such as BYD and CATL.

“At the same time, they wouldn’t have got to their size without some level of support from the government … At any given time, the risk is that the [Chinese Communist] party has a new directive and says we’re not operating in the US. Whatever the ownership of the company might be comes a distant second to that,” Dunne says.

Though he did not comment specifically on Gotion, FBI director Christopher Wray said during February Congressional hearings on China cybersecurity that such projects “can still raise national security concerns because it provides a vehicle for [China] to, if they want to leverage that access, to conduct surveillance or other operations that undermine our national security.”

Gotion’s headquarters are in Silicon Valley. The articles of association of its parent company in China require it to ‘carry out party activities in accordance with the constitution of the Communist party of China’. Photograph: Michael Vi/Alamy

Tim Hahn, a Republican who backs the project for its economic benefits, writes off such fears as an “element of local, small-minded bigotry and xenophobia”.

“You really don’t have to have a well-constructed argument to convince people that it’s bad that China does business near you – just go out there and yell ‘China, China, China, CCP,’” he says.

As the battle among local residents has devolved, each side has accused the other of criminal acts. Brock says she has received death threats and claims to have found motor oil in a drinking trough for her animals.

‘I’m hoping no one keeps a grudge’

The plan’s opponents say allegations of outside influence by Trump-aligned political forces are untrue and point to the successful recall in November last year of five out of seven members of the Green Township board of trustees who backed the project as evidence of wide support. The new board, which now has a majority opposing Gotion’s plans, immediately voted to symbolically rescind support for the project in November last year, even though the township had already signed a development agreement.

The agreement is invalid, the new board claims, alleging it was signed behind closed doors and violated the Open Meetings Act. Gotion disagrees, is already clearing trees from the site and in early April filed a federal lawsuit alleging Green Township breached the agreement by wrongly derailing a project in which Gotion has already invested millions of dollars.

Despite the personal nature of the attacks that the dispute has created, Rose is optimistic that the wounds will heal after the Gotion battle is settled.

“I’m just hoping in a few years, when this is all done, we can all get back together and see what else we can fight about,” she joked. “Seriously, I’m hoping no one keeps a grudge even though it has been so rough and disappointing.”

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