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State-Level Public-Private Cooperation to Bolster Critical Mineral Supply Chains: A Look at Michigan

At ARPN, we have long been spotlighting federal policy initiatives to bolster our critical mineral supply chains. Meanwhile, often considered policy laboratories, the individual states are also not sitting idly by, and it’s time to feature some of their efforts.

With the EV revolution fueling much of the skyrocketing demand for the “battery criticals” lithium, cobalt, graphite, nickel and manganese, it is only fitting that our first example takes us Michigan, home to Detroit, the cradle of the U.S. automobile industry.

As Tim Higgins reports for the Wall Street Journal, the State of Michigan earlier this month approved a more than $200 million grant for Our Next Energy Inc.’s (ONE) planned EV battery factory in Van Buren Township, Michigan.  The company, an EV battery startup spearheaded by a former leader of Apple Inc.’s secretive car project, plans to invest $1.6 billion into the project, which is slated to be fully operational by the end of 2027 and have the capacity make battery cells for about 200,000 EVs annually.

The push to build out a comprehensive domestic EV battery supply chain, as followers of ARPN well know, received a jolt of energy with the passage of the federal Inflation Reduction Act (IRA) and its domestic sourcing requirements for EV credits.

While the U.S. automotive industry has largely focused on lithium-ion battery cells, ONE, according to Higgins, aims to ultimately produce 20 gigawatt hours, amounting to the equivalent of battery packs for about 200,000 vehicles each year by focusing on lithium iron phosphate (or lithium ferro-phosphate, LFP) cells, which, while said to have a shorter range than its lithium-ion peer, is also considered to be less volatile and less expensive.

ONE’s goal is to also build a battery pack with a more than 600-mile range at a significantly lower price point for the cells making up the pack.

The State of Michigan’s $236.6 million in state funding for the project include

  • A $200 million Critical Industry Program performance-based grant through the Strategic Outreach and Attraction Reserve (“SOAR”) Fund
  • A $15 million Jobs for Michigan Investment Fund Loan
  • State Essential Services Assessment Exemption valued at $21.6 million

In a statement released on October 5, 2022, Michigan Gov. Gretchen Whitmer said of the project:

“Our Next Energy’s $1.6 billion investment creating 2,112 jobs in Van Buren Township will build on our economic momentum and secure the future of mobility and electrification right here in Michigan. This innovative, Michigan-made company is on the cutting-edge of battery technology, and the work they’re doing will increase the range of electric vehicles to over 600 miles on a single charge. 

With this new gigafactory, we will continue bringing the supply chain of electric vehicles, chips, and batteries home to Michigan and the USA while creating a sustainable, clean energy economy. I am proud that Democrats and Republicans in Michigan came together to build up our economic development toolkit and empowered our state to compete for every project and every job.”

States like Texas, Georgia,Kansas and Oklahoma have also attracted battery makers as automakers scramble to lock down supplies and policy stakeholders work to create frameworks conducive to attracting investment into these critical industries.

In the coming weeks and months, ARPN will continue to feature more examples of state level public-private cooperation or formalized public private partnerships (PPPs) to sustainably strengthen domestic critical mineral supply chains.