HOLLAND, Mich. (WOOD) — LG Energy Solution Michigan Inc., more commonly known as LG Chem, is one step closer to gaining more financial support for its $1.7 billion expansion in Holland.

On Tuesday morning, the Michigan Economic Development Corporation’s Strategic Fund Board approved a $500 million private bond inducement for the lithium-ion battery manufacturer.

“This huge project… is very important for the electric vehicle industry and especially in U.S. market. And our headquarter, LG Energy Solution, is very excited about this project,” LG representative Kim Enochs told the board.

The move comes five months after the MSF Board greenlighted a $189 million incentives package for LG Chem’s expansion, which will allow the company to expand battery production by about 500%. In all, the project is expected to get about $525 million in incentives, but LG Chem will have to reach certain hiring milestones over the years to earn all of the benefits.

LG Chem plans to add a two-story, nearly 963,000-square-foot facility to its Holland campus off 146th Avenue west of I-196. The expansion also calls for a warehouse, control room, cell test building, offices, utility and safety facilities.

Enochs said site groundwork is finished and crews are starting to build the structures.

“So things are going smooth and everything is on track,” Enochs said.

LG Chem will manufacture new long cell design batteries at the site. The batteries are expected to maximize electric vehicle driving range and energy storage. Enochs said LG Chem expects to start production in the second quarter of 2024.

The bond inducement is a procedural step toward financing, but Tuesday’s approval effectively allows the company to begin the solid waste mitigation portion of its project then reimburse those expenses through future bond financing. Those investments could include wastewater catch and treatment systems and capturing particles found in the facility’s exhaust system related to the manufacturing process.

The MEDC would then vet LG Energy Solutions and its request before the bonding proposal would go to the Michigan Strategic Fund Board for potential approval to authorize bonding.

While the bonds would be sold publicly, the MSF is involved in the process because it’s the state entity that has the power to tie tax-exempt status to bond issues, according to Chris Cook, capital access managing director at the MEDC.

LG Chem employs 1,495 people at its original EV battery plant in Holland, which was built in 2010 with the help of $151 million in federal funds. Through the expansion, the company expects to add 1,200 jobs paying an average of $65,000 per year by 2025.