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EV battery spending spree snubs Michigan, favors ‘Battery Belt’

Washington – The US Department of Energy on Wednesday announced $ 2.8 billion in funding across 12 states for electric vehicle battery production. None of the projects – most of which focus on battery mineral processing or component manufacturing – are in Michigan, which remains the largest auto-producing state in the nation.

When asked why that is, DOE officials who spoke on the condition of anonymity said the reason is twofold: There was a rush to investment in battery cell manufacturing after the passage of the Inflation Reduction Act, which reduced the need for federal funding for that stage .

And secondly, the agency wanted to select projects located near the raw material supply or near their customers. Michigan’s Upper Peninsula is home to the only nickel mine in the US, one of the crucial components of EV batteries.

President Joe Biden speaks to reporters after an event about infrastructure in the South Court Auditorium on the White House complex in Washington, Wednesday, Oct. 19, 2022.

But that doesn’t mean Michigan won’t benefit from the influx of cash: It targets a portion of the EV battery supply chain that is particularly weak within the US right now, experts say, and strengthening those links will help Michigan-based companies as they pivot to EVs.

There has been rapid growth in battery cell and battery pack assembly plants over the past three years, including in Michigan, said Sam Abuelsamid, a principal research analyst at Guidehouse Insights.

“But you have to have all these other components in order to produce those cells,” he said. “We’re now starting to see the rest of that domestic supply chain get filled up, and that will help to make the overall industry more resilient to future shocks.”

The DOE officials said there will be multiple rounds of funding and that Michigan projects might receive funding in the future depending on “which part of the supply chain we’re solving for.” The $ 2.8 billion in funding is the first round of battery investment from the Bipartisan Infrastructure Law, which was enacted last year. The law allocated more than $ 7 billion for critical materials and components for electric vehicle batteries.

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