Michigan Has Given the E.V. Industry $1.4 Billion and Counting

Michigan Has Given the E.V. Industry $1.4 Billion and Counting

Carmakers don’t need a crony-capitalist slush fund.

JOE LANCASTER | 5.24.2023 1:00 PM

In December 2021, Michigan Democratic Gov. Gretchen Whitmer signed legislationestablishing the Strategic Outreach and Attraction Reserve (SOAR) program—“a $1 billion economic development fund to ensure the state can compete for billions of dollars in investment and attract tens of thousands of jobs to bolster our economy,” according to the press release. Michigan’s legislature apportioned an initial $1 billion for the program. SOAR grants would be disbursed to companies that invested in the state, or to state-affiliated entities for the benefit of those companies; all transfers would require approval first from the state Senate Appropriations Committee and then from the entire legislature.

In practice, SOAR just contributes further to a growing trend of corporate welfare, in which states give away huge chunks of taxpayer money to private companies. Michigan’s example should prove to taxpayers and state governments alike that private companies alone should bear the costs of their own development projects.

According to a spreadsheet provided to Reason by the Michigan Department of Technology, Management, and Budget, the state has apportioned $2.166 billion to SOAR since March 2022. Of that amount, it has approved more than $1.4 billion for disbursement. So far, every expenditure has gone to benefit a company making electric vehicles (E.V.s), E.V. batteries, or associated battery components.

The state spent more than 75 percent of its initial SOAR infusion within seven months on just two deals: $666.1 million to General Motors (G.M.) and $100.8 million to Ford. Each disbursement came in response to that company’s pledge to update or expand its Michigan manufacturing footprint.

In April 2023, the state authorized another $585 million in grants: $210 million to Ford for a battery plant, $200 million to battery manufacturer Our Next Energy, and $175 million to Gotion, Inc., for an E.V. battery component factory.

These incentives are ostensibly supposed to pay off in the long run: By attracting companies to your state, you create good-paying jobs and further economic development down the line. But there is increasing evidence that those agreements are a bad deal for the states that make them, spending hundreds of millions or billions of dollars in order to “create or retain” a few thousand jobs here and there. Corporate welfare simply does not work, especially not the way its proponents say it does.

Even the numbers that Michigan quotes are unimpressive. For example, while Gotion pledged to spend $2.36 billion on its factory, Michigan’s incentives so far have eclipsed$800 million, meaning the state’s taxpayers are funding one-fourth of the entire project.

While the company promises to create 2,350 jobs, the state’s contribution to the project breaks down to more than $340,000 per job. For the same amount, Michigan could pay each of those 2,350 employees’ salaries for almost six years.

G.M. has committed to investing at least $7 billion in the state across four sites and to create or “retain” 5,000 jobs. But state and local governments have so far kicked in $824 million in incentives and $666 million in SOAR funding, plus a $936 million break on utility rates—a total investment of $2.426 billion in direct grants or lost revenue, or more than one-third of G.M.'s entire pledged investment. Each of those jobs will cost Michiganders over $485,000.

Our Next Energy promises that its plant will create 2,112 jobs, in exchange for $200 million in state money—a comparatively paltry state expenditure of just under $95,000 per job. Notably, that company raised $300 million in venture funding in February to help finance its Michigan factory.

Ultimately, that method of financing projects is far superior: Companies with billion-dollar valuations should shoulder the burden of funding their own development projects. Let them take the risks and, if successful, reap the rewards—all on their own.

State governments can play a role in this process, but not by dispensing cash to favored firms. Rather, they should focus on making their states more hospitable to allbusinesses, perhaps by simplifying their tax structure or updating their infrastructure. Corporate welfare simply distorts the market, rewards companies that are politically connected, and wastes tons of taxpayer money.

Abraham Lincoln certainly knew a thing or two about corporate welfare, he invented the term!

Another green energy winner:

Granholm’s Green Energy Millions

Biden energy secretary nets $1.6 million after offloading admin-backed electric bus company

Matthew Foldi and Collin Anderson

May 27, 2021

Energy secretary Jennifer Granholm has finally sold hundreds of thousands of shares in a green energy company that has received the backing of the Biden administration.

On Wednesday, Granholm confirmed she earned a $1.6 million profit on her shares of Proterra amid a firestorm over her financial ties to an electric vehicle company repeatedly promoted by the Biden administration. In selling off her shares, Granholm was able to defer paying capital gains taxes on the $1.6 million sale because cabinet officials are not penalized with the tax on assets they are required to sell as a condition of joining the administration. The Biden administration is seeking to raise the capital gains tax on America’s wealthiest families.

On May 11, Granholm filed an Office of Government Ethics divestiture certificate. She confirmed the sale Wednesday. The former Michigan governor reported selling more than 240,000 shares in the electric bus manufacturer to an unnamed buyer. She valued the stake at up to $5 million in a January financial disclosure.

The Department of Energy did not return to requests for comment.

While Proterra is slated to go public within the next few weeks, Granholm’s sale of the shares of the yet-to-be publicly traded company likely occurred in an off-market private sale. The Washington Free Beacon reported that major Democratic donors are invested in the company taking Proterra public, including at least one member of the megadonor Pritzker family who stands to own up to 7 percent of the company when it finally becomes public.

The White House did not respond to requests for comment.

Granholm’s divestment comes weeks after President Joe Biden toured Proterra, prompting ethics concerns from federal lawmakers. Sen. Ted Cruz (R., Texas) compared the Biden administration’s ongoing promotion of the company to the Obama administration’s pouring millions of taxpayer dollars into Solyndra, a failed solar panel company. Sen. John Barrasso (R., Wyo.) wrote to the Department of Energy’s inspector general demanding a review of Granholm’s stake in the company.

“Energy Secretary Granholm held millions of dollars of investments in an electric bus company. During her nomination hearing, she committed to the Senate that she would avoid the appearance of any conflicts of interest,” Barrasso told the Free Beacon. “Even though Secretary Granholm has now sold these stocks, her actions appear to be a significant conflict of interest.”

Rep. Ralph Norman (R., S.C.) wrote directly to Granholm requesting key documents about any Department of Energy promotion of Proterra. Rep. Jim Banks (R., Ind.) called for Granholm to offload her Proterra shares on May 5.

Granholm played a leading role in shaping the administration’s infrastructure package. Biden tasked her specifically with “identifying risks in the supply chain for high-capacity batteries, including electric-vehicle batteries, and policy recommendations to address these risks.” The legislation includes a $174 billion investment in the electric vehicle market and creates a Clean Buses for Kids program in order to “electrify” at least 20 percent of the nation’s school buses. Proterra opened a battery manufacturing plant in California just weeks after Biden’s election.

In addition to Biden’s virtual tour of Proterra’s South Carolina factory, the president in May hosted company CEO Jack Allen at the White House’s Leaders Summit on Climate. National climate adviser Gina McCarthy praised Proterra for its “amazing” work at the summit and asked Allen “what role” the federal government can play in “spurring the demand for zero emission electric vehicles, including school buses.”

Granholm and Allen spoke at the conference, with Allen thanking Biden for his “longstanding support of electric transit buses and zero emission transportation.” While Granholm has denied any involvement of planning Proterra-related events, the White House has yet to say who was involved in planning them.

News Story

Yes, Granholm’s Administration Gave Cash To Failed Electric Car Battery Company

She denied it in a U.S. Senate confirmation hearing

By Tom Gantert | January 28, 2021 Share on Facebook Share on Twitter

Former Gov. Jennifer Granholm was grilled this week by members of the U.S. Senate Energy Committee about her track record on energy issues in Michigan, and among other things claimed that a newspaper op-ed describing the failure of “green-energy” subsidies she promoted here was inaccurate.

She implied taxpayers did not lose any money in one particular corporate subsidy deal she was asked about, which is not accurate.

Granholm made the claim at a Jan. 27 hearing by the committee on whether to confirm her nomination by President Joseph Biden as the U.S. Secretary of Energy.

The op-ed cited by the former governor was written by Jarrett Skorup, director of marketing and communications for the Mackinac Center for Public Policy. It came up when Republican Sen. John Barrasso asked Granholm about her Michigan track record on energy issues.

Barrasso cited a Dec. 29, 2020 op-ed in USA Today stating that Jennifer Granholm’s record on corporate renewable energy subsidies should frighten Americans.

“It alleges that as governor you directed hundreds of millions of dollars to battery solar other green energy countries that failed to deliver on job creation promises,” Barrasso said at the hearing.

Barrasso cited A123 Systems, a company that had promised 3,000 jobs in Michigan. A123 Systems received authorization to get more than $140 million in state tax credits and subsidies, and then declared bankruptcy. A Chinese firm bought A123 Systems’ intellectual property.

“In short, American taxpayers spent close to $400 million to subsidize a technology transfer to the Chinese,” Barrasso said. “So based on this record, can you provide us something in terms of what confidence we should have if you are confirmed that you will be able to invest U.S. taxpayer dollars wisely.”

Granholm responded by attacking the credibility of the op-ed.

“First, that article is incorrect,” Granholm responded. “In Michigan, we have something called the Michigan Economic Growth Authority that offers tax credits to firms that promise to build, create a certain number of jobs. But if they don’t, they don’t get the funds. So, in Michigan, because the way that tax credit is structured, we don’t pay out if firms don’t deliver.”

Granholm’s administration offered A123 Systems $100 million in battery credits, $25.3 million in general corporate "MEGA " credits, $10 million in grants, a $4 million loan from a “21st Century Jobs Fund,” $300,000 in training grants and additional exemptions from state taxes.

It is not known how many state tax dollars were actually delivered to the company in the form of “refundable” business tax credits for battery production, due to a 2009 government secrecy law Gov. Granholm signed that hides the actual handout amounts from the public. It is known that A123 Systems received state payments in 2012, 2013, 2014 and 2015, based on some state reports.

Due to the same secrecy law taxpayers also do not know how much the company received in refundable MEGA tax credits. It appears A123 received credits for 2010, 2011 and 2012 based on some state reports. In many, if not most cases, such credits involve actual disbursements of cash to well-connected recipients.

The company is known to have received $10 million in the form of a grant from the 21st Century Jobs Fund, and there is a footnote in a required annual report indicating that the state received $2 million in loan repayments from the company as part of its bankruptcy proceedings.

She is a roach with glasses!

Granholm, Whitmer, both are beyond corrupt.

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