Michigan to vie for 3rd Stellantis battery plant in North America

Detroit ― The maker of Jeep SUVs and Ram trucks is giving Michigan another chance to land an electric-vehicle battery plant and the hundreds of jobs that come with one after the Great Lakes State missed out on the company's first two for North America.

Mark Stewart, chief operating officer for North America at Stellantis NV, said the automaker could double the number of battery plants it has said it will launch by 2030 in the United States, Canada and Mexico to a total of four. He said Michigan, which has secured only one battery plant from a rival automaker, will be a part of those discussions, including for a third plant that would open in 2026 or 2027. The company expects up to 53% of its sales here will be all-electric by the end of the decade with 25 battery-electric options.

"Michigan will be a part of that discussion," Stewart told The Detroit News after a fireside chat Tuesday at Reuters' Automotive USA conference at the Huntington Place convention center downtown. "We're going back and having discussions with all of the states again, but ... I told (Michigan Economic Development Corp. CEO) Quentin Messer Jr. and (Gov.) Gretchen (Whitmer) both that we absolutely want to want to engage in conversations and look at sites again, being close to our areas of core strength and our people."

The state that put the United States on wheels has lost out on major investments even from its own automakers, including Ford Motor Co., for battery plants. General Motors Co. and its Ultium Cells LLC joint venture with LG Energy Solution are investing $2.5 billion outside Lansing. A few other battery manufacturers are adding capacity, but Michigan has fallen short in competition with states like Tennessee, Kentucky, South Carolina and Georgia that lured projects with rich incentives, ready-to-build land and cheaper energy prices.

The acceleration of Stellantis' plans after the company reiterated in March it planned just two North American battery plants by 2030 is indicative of the effects of new federal legislation to incentivize customers to purchase electric vehicles that are built in North America along with their batteries. Companies like Toyota Motor Corp., Honda Motor Co. Ltd. and Hyundai Motor Co. have scaled up EV investments in the United States.

"With the additional push for battery electric that many automakers didn’t see coming as quickly, older plans have to be revisited," said Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions LLC. "Getting more sourcing on batteries will be crucial. Let’s hope the industry has learned from the semiconductor shortage on the timing to lock in a supply of batteries."

Stellantis is flexible on the locations of third and fourth battery factories, Stewart said, though proximity to its assembly plants is important. An announcement could come within the next four to five months, he added, since it typically takes roughly three years to get a battery plant up and running.

He said the company's goals assume a strong acceptance rate of EVs and that vehicles can meet requirements of the legislation known as the Inflation Reduction Act, which offers up to a $7,500 subsidy for EVs. Few vehicles right now meet the North American supply requirements for the incentive, though Stellantis doesn't have any EVs in North America right now. Its first, an all-electric Ram ProMaster commercial van, launches next year.

"There's a lot of unknowns," Stewart noted. "But we're really optimistic on that side of it."

He pointed to results of the Jeep Wrangler 4xe, which has become the No. 1 plug-in hybrid in the United States and is sold out for the year because of battery constraints, he said.

The transatlantic automaker already has announced two joint-venture battery plants in North America as a part of its $35.5 billion investment by 2025 into electrification and software, but Michigan so far has missed out.

In Windsor, Ontario, with LG Energy Solution under the name NextStart Energy, a $4.1 billion plant starting in the first quarter of 2024 is slated to have 45 gigawatt hours of annual capacity, creating 2,500 jobs. In Kokomo, Indiana, with Samsung SDI, a $2.5 billion plant starting in the first quarter of 2025 is expected to offer annual production capacity of 23 gigawatt hours, though that could grow to 33 gigawatt hours. The manufacturing site should create 1,400 jobs.

Whether those workers will be represented by the United Auto Workers is up to them, Stellantis leaders have said. Organizing the new battery plants and including their workers in the master contracts is a primary focus for the union. The UAW has criticized companies like GM and Ultium Cells for not permitting a card check process that would allow for a plant in northeast Ohio to unionize with a majority of employee support without a formal election. Stewart said Tuesday he's "agnostic" about the method by which a plant is organized so long as it's "handled properly."

Stewart said the company is open to discussion around whom it would partner with for the third and fourth battery plants, though working with existing partners could make sense. Previously, Stellantis CEO Carlos Tavares had suggested Automotive Cells Co., a joint venture that Stellantis has in Europe with petroleum company TotalEnergies SE and Daimler AG's Mercedes-Benz for a plant each in France, Germany and Italy, could expand to North America.

The News previously reported Stellantis and Samsung considered Monroe County's Dundee, where Stellantis has a 1.3-million-square-foot engine plant for a new battery operation. Properties near Belleville and Trenton were deemed too small. A megasite in Marshall on the state's west side also was under consideration.

Efforts more recently have been made to get that property in a position to be more attractive to developers, said James Durian, CEO of the Marshall Area Economic Development Alliance. A comprehensive strategic site plan and traffic study are now in hand with technical information on the grounds, including environmental conditions. The alliance also has an option agreement with the owner that would allow the alliance to acquire the property and turn it over immediately to a developer. Next is planning and development for water and wastewater infrastructure.

"We are in a much better position now than we have been for companies to come in and utilize the site," Durian said. "We have much more information, and much more is build-ready."

In addition to the Ultium Cells plant in Delta Township, Michigan has supported the expansion of LGES's existing battery plant in Holland as well as recently announced investments by Chinese-owned Gotion Inc. outside Big Rapids and by Novi-based startup Our Next Energy in Van Buren Township.

The state has landed more than $10 billion in projects and announced nearly 15,000 auto-sector jobs in less than a year following the bipartisan passage of the $1.5 billion Strategic Outreach Attraction Reserve fund in December to strengthen Michigan's ability to compete with other states, according to Bobby Leddy, a spokesman for the governor's office.

“Michigan is competing to win," Leddy said in a statement. "Thanks to the historic economic development legislation that Governor Whitmer signed into law, Michigan’s economic momentum is building as we win deal after deal to grow our economy, create good-paying jobs, and bring critical supply chains home from China to Michigan.

“We are more committed than ever to competing for every job and every dollar to build on our rich automotive legacy, creating opportunity for generations of Michiganders, and getting things done that make a real difference in people’s lives. Michiganders are tough, and we will out-hustle and out-compete anyone to ensure we can keep building the future right here in Michigan.”

MEDC spokesman Otie McKinley said in a statement that it's premature to comment on ongoing discussions with Stellantis.

"Team Michigan is proud to remain the global home for opportunity within the future of mobility and electrification," McKinley said. "Michigan has a long-standing relationship with Stellantis, who continues to be a big part of Michigan’s leadership in mobility and electrification. We remain grateful for the company’s continued investment in both manufacturing and R&D in the state.

"Michigan remains the center of high-tech electric vehicle and component production in the U.S. Through the Office of Future Mobility and Electrification and investment in the Michigan Electric Vehicle Center among other initiatives, our state continues to be at the forefront of developing the vehicles, components, roads and people of the future that will advance Michigan’s EV infrastructure and workforce landscape and keep the world moving."

The state also has worked with its major utilities to attract energy-intensive projects. DTE Energy Co.'s new "XL High Load Factor" rate, introduced in December, is about half of the state's average industrial energy price. Such offerings were helpful in securing the GM and Our Next Energy projects.

"DTE Energy is working with the MEDC and state and local government and business leaders to aggressively attract new business to Michigan," spokesman Pete Ternes said in a statement. "We recognize the importance of keeping large businesses located in the state, and helping new business grow, and have provided power to Michigan industries for more than 100 years."

CMS Corp. spokeswoman Katie Carey said in a statement Consumer Energy also is supporting the MEDC to help Michigan compete along with assisting in site readiness, offering its own economic development energy rate, investing $1 billion annually through 2025 to update the power grid for improved resiliency and ending the use of coal power by 2025.

Most of Stellantis' North American assembly plants are clustered in southeast Michigan with two in Detroit, one in Sterling Heights and one in Warren. Plus, there's a Chrysler minivan plant over the Detroit River in Windsor, the Jeep Wrangler plant in Toledo and the Jeep Cherokee plant in Belvidere, Illinois. Having proximity to those facilities is important to reducing logistical costs, challenges, safety risks and carbon emissions with transporting heavy batteries.

"Shipping batteries is expensive," AutoForecast Solutions' Fiorani said. "Especially when you are going to ship large volumes of them, it’s extra costly, so sourcing them locally would make a lot of sense, and Warren Truck currently builds the Wagoneer, and it will build the electric version, as well."

Jeep executives have said an all-electric Wagoneer will launch by 2025. Warren previously underwent a $1.5 billion update to add production of the Wagoneers alongside assembly of the previous-generation Ram 1500 Classic. The construction includes flexible capability to support plug-in hybrids and all-electric vehicles.

But with vehicles like the ProMaster being built in Mexico, Stellantis likely will want to source batteries there, too, or even in the southern United States, said Sam Abuelsamid, principal e-mobility analyst for market research firm Guidehouse Inc. Batteries and vehicles built in Mexico are eligible under the IRA's rules.

Pushing EVs to represent 50% or more of U.S. sales by 2030 is aggressive, Abuelsamid noted. Guidehouse Insights is forecasting EVs will permeate sales at less than 40% by then because of challenges in obtaining the needed raw materials and the premium pricing of EVs over internal combustion engine vehicles.

"If gas prices remain elevated, a lot of things can change," Abuelsamid said. "EV demand could grow higher and higher. It's not impossible to hit 50%, but it’s going to be really tough."

bnoble@detroitnews.com

Twitter: @BreanaCNoble