Our Next Energy and Gotion Choose Michigan for Separate Projects Amid Heated Competition
Our Next Energy, a 2-year-old startup with backing from BMW, said it is building a $1.6 billion plant in the heart of the U.S. auto industry outside Detroit. And Gotion High-Tech Co., one of the largest battery manufacturers for electric vehicles in China, said it would invest $2.36 billion in a plant in Big Rapids, about an hour north of Grand Rapids.
Ford Motor Co., General Motors and Stellantis, the owner of Chrysler and Dodge, have been investing in electric vehicle production in Michigan and elsewhere across the country as demand for the automobiles has risen and competition among suppliers has heated up. Michigan lost a $2.5 billion Stellantis electric vehicle battery plant to Indiana in May. Last year, Ford announced a battery plant in Kentucky near its assembly plants there and a new battery and production campus in West Tennessee. Hyundai Motor scored a large incentive package from Georgia for an electric vehicle factory near Savannah.
Michigan Gov. Gretchen Whitmer said in a statement last week that Gotion’s investment in Big Rapids is the “biggest ever economic development project in Northern Michigan and will shore up our status as the global hub of mobility and electrification.” Gotion has existing U.S. research and development operations in Fremont, California, and Cleveland, Ohio, but the Michigan plant represents its first U.S. manufacturing operation.
Gotion’s plant will employ 2,350 people while Our Next Energy’s plant will employ 2,100 workers to make battery cells designed to give electric vehicles longer range before needing to recharge.
Our Next Energy said it conducted a competitive process that considered 12 states and a Canadian province. It chose Michigan because of the state’s commitment to becoming a major player in the electric vehicle sector. With the deal, Our Next Energy also received a $200 million grant from the state.
Gotion chose Michigan over Texas, Georgia, Kentucky, South Carolina, Illinois and Ohio, according to the state’s announcement, after the state offered a package of incentives valued at $715 million. Gotion plans to build two plants measuring 550,000 square feet each to produce cathode materials along with other supporting facilities on about 260 acres.
For its operation, Our Next Energy announced it leased a 659,589-square-foot building in Van Buren Township being constructed by New York industrial developer Ashley Capital. Our Next Energy said in its announcement that it will take possession of the building in January after construction is completed. Production is scheduled to begin in 2024.
Our Next Energy’s business model is to build a battery that allows electric vehicles to travel farther before needing to charge. Range has been one of the factors that consumers have cited for not buying an electric vehicle.
Before founding Our Next Energy in Novi, Michigan, Mujeeb Ijaz had been a senior director for special projects with energy storage. Ijaz spent 16 years with Ford Motor Co. in electric and fuel cell vehicle engineering early in his career.
In March, he landed $65 million in a venture funding round led by BMW I Ventures. The round includes hedge fund and venture capital firm Coatue Management founded by Philippe Laffont, who Forbes lists as being worth $6.9 billion.
Baris Guzel, a partner at BMW I Ventures, said in a statement at the time of the funding that Our Next Energy’s “core principles of doubling the range, decreasing the cost of the batteries and creating a local supply chain, resonated strongly with us.”
The funding followed a demonstration of its Gemini battery using a Tesla Model S body that went 752 miles before needing to recharge. According to the Environmental Protection Agency, the median range is about 250 miles. Edmunds, an online automotive information and review company, tested a 2022 Lucid Air Dream, which starts at $169,000, with a maximum range of 505 miles.
Our Next Energy signed an agreement with BMW in June to test batteries in the German automaker’s iX Sports Activity Vehicle prototype that would enable it to travel 600 miles or more on a single charge.