LANSING, Mich. (AP) - The fierce competition for advanced battery projects is sparkinga new round of tax incentives in Michigan, which hopes the taxbreaks for makers of electric and hybrid vehicle batteries willgive Michigan a leg up on other states.
The tax credits, which were awarded Tuesday, are designed tobolster the case for why companies locating in Michigan should wina bigger share of $2 billion in federal stimulus money for energyprojects than businesses in other states.
Applications are due at the U.S. Department of Energy by May 19,and competition for the grants is ramping up, one reason Michiganrecently pushed through its battery tax credits.
"No other state has legislation like we do," said EricShreffler, who works on developing new markets at the MichiganEconomic Development Corp.
Gov. Jennifer Granholm last week signed the tax incentives intolaw, piggybacking on a law enacted in January. The measure createstwo additional tax credits for building integrated battery cellmanufacturing plants in the state.
The MichiganEconomic Growth Authority on Tuesday awarded three credits thatbattery manufacturers will tap for up to $25 million a year overfour years, or $300 million altogether. To get the credit, abattery company must open a plant and create at least 300 news jobsin the state.
MEGA also approved a fourth project contingent on another $100million credit winning legislative approval by May 30.
"Instead of being perceived as the Rust Belt, Michigan intendsto lead the nation to energy independence," Granholm said Tuesdayat the MEGA meeting.
Michigan is offering other tax breaks worth up to $225 millionin coming years to help make it the center of research andmanufacturing for batteries used in hybrid and electricvehicles.
The United States currently has no large-scale production plantfor the lithium-ion battery, the power source General Motors Corp.expects to use in its plug-in hybrid, the Chevrolet Volt, scheduledto be rolled out in 2010. Most battery technology is beingdeveloped in Asia.
Lawmakers expect the U.S. battery market to reach $18 billion ayear by 2020 and think three cell manufacturers could create nearly40,000 Michigan jobs by then.
Michigan is in desperate need of new jobs because the ailingauto industry has shed hundreds of thousands of jobs in the statein the past eight years and continues to lay off workers. Creatingjobs in battery technology is seen as a way to tap into a part ofthe industry that still shows promise.
"We are helping to secure our state's future in automotivemanufacturing," said state Sen. John Pappageorge, R-Troy.
MEGA approved tax credits for:
- Milwaukee, Wis.-based Johnson Controls- Saft Advanced Power Solutions, a joint venture between Johnson Controls and French battery producer Saft, which plans to open a plant in Holland. It has partnered with Ford Motor Co.
- A123Systems Inc. of Watertown, Mass., which plans to open a plant in Livonia. Chrysler LLC has picked A123Systems to supply batteries for the automaker's first-generation electric cars scheduled to go on sale next year.
- KD Advanced Battery Group, a joint venture involving Dow Chemical Co., Kokam America Inc. and Townsend Ventures, which expects to build a plant.
- Korean-based LG Chem-Compact Power, which plans a project if lawmakers pass an additional tax credit. GM has partnered with LG Chem-Compact Power to build batteries for the Volt.
Pappageorge said Tennessee, California and New York also may beaggressively seeking the stimulus money by attracting companieswith tax breaks.
And Kentucky on Monday beat out seven other states competing fora plant planned by a group of U.S. technology companies allied witha national laboratory. Whether the project goes forward depends onthe state winning a share of the federal stimulus dollars.
Kentucky and its two largest state universities also are teamingup with Argonne National Laboratory in suburban Chicago to set up anational battery research and development center.
Shreffler said Michigan's economic development staff decidedagainst trying to attract or bring together a consortium ofcompanies. Instead, it sought partnerships with individualcompanies that are global leaders in the field.
The state already has used tax credits to lurethe film industry to Michigan.
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