By: Mark Glennon*
UPDATE: See Wirepoints’ most recent story on this matter here.
State of Illinois tax incentives exceeding half a billion dollars are a comparatively small part of taxpayer money that will go to Gotion, Inc. for an electric vehicle (EV) battery factory in Illinois.
Through federal tax credits alone, which so far are going mostly unreported, Gotion will be paid billions more than its construction costs.
In other words, taxpayers will be paying many times over the cost of a new factory they will not own.
It will be owned, instead, by Gotion, and Gotion is widely reported to have close connections to the Chinese Communist Party (CCP).
Here are the details:
Governor JB Pritzker announced the state’s deal with Gotion on Friday for construction of the project in Manteno, southwest of Chicago. The plant is expected to cost $2 billion and employ 2,600 workers. Gotion’s total incentive package from the State of Illinois is valued at $536 million, according to Pritzker’s announcement. In addition, Kankakee County agreed to cap property taxes paid on the approximately 150-acre property at $2 million per year for the next 30 years.
The state incentive package alone, exceeding $206,000 per worker, is exceptionally high in comparison to typical plant-siting location incentives around the nation other than battery factories. “The average incentive deal in the U.S. might be around US$50,000 per job,” although it’s not unusual for highly capital-intensive projects to receive incentives of over US$100,000 per job.” That’s according to senior economist at the WE Upjohn Institute for Employment Research, quoted in the Financial Times.
However, those subsidies are dwarfed by huge federal tax credits now being lavished on new battery producers under the Inflation Reduction Act of 2022, which devoted $783 billion to global warming and green energy spending. President Biden recently admitted that the act was not about inflation reduction. It has been heavily criticized as climate extremism.
Under that law, owners of new EV battery plants get tax credits based on the production capacity of the plant, and those credits have been massive, often in the billions of dollars per plant.
One group closely researching the subsidies is GJF, Good Jobs First, a worker-oriented policy group in Washington, D.C. Their July report details the credits for recent battery plant announcements.
The tax “credit alone is large enough to cover each facility’s initial capital investment cost and wage bill for the first several years of production,” the group found.
For example, Ford Motor’s new $3.5 billion battery plant in Marshall, Michigan, will be eligible for an estimated $6.7 billion tax credits. State and local governments have already awarded it an additional $1.7 billion in subsidies. The company has promised to create 2,500 new jobs that it says will pay an average annual wage of just $45,000 a year, while reaping subsidies of $3.4 million per job. [Emphasis theirs.]
I reached out to GJF for an estimate of the federal tax credits that will be available to Gotion for its Illinois project.
Given the production capacity of the Illinois plant, which is 40 GWh of battery cells and 10 GWh of battery packs, Gotion will be eligible for about $1.5 billion per year for the first five years of production, according to Jacob Whiton at GJF. That’s $7.5 billion plus the half billion from the state, for a total of $8 billion – for a plant that will cost only $2 billion to build. I’ve asked the Illinois Department of Commerce & Economic Opportunity if they have their own number and for any comment thereon, and will update if I get a response.
The tax credits effectively have cash value to Gotion. “Recall that recipients can choose to either sell their credits or make them refundable for five years,” Whiton told me, “so if their value exceeds the company’s federal income tax liability, the credits can be converted into cash.”
The large subsidies are precisely why the Inflation Reduction Act has started an EV battery factory frenzy. “The legislation is literally paying companies to manufacture their products domestically, all in service of making the country more self-sufficient regarding clean energy,” one report says. “What has taken place as a result of and since the Inflation Reduction Act can simply not be overstated,” said Aaron Brickman, senior principal in the U.S. program of clean energy think tank RMI.
The frenzy is tied to a drastic error estimating the cost of the program. The Congressional Budget office initially pegged the cost at $31 billion, but current actual estimates range as high as $200 billion.
But the honey pot is not being shared with workers. According to GJF’s report, early indications are that all five plants will be offering sub-market wages for production workers.
The nationwide average hourly wage for production workers in the U.S. is more than expected average wages at any of these facilities, which are already biased upward by the inclusion of higher-paid supervisory and managerial workers in the facility’s employment total, according to GJF.
They note, however, that Illinois did somewhat better, telling me that the state’s program has a very good minimum wage standard set at 120% the average wage in the project county for workers in the same occupation group. “The program, GJF said, “also requires 1) a project labor agreement during construction, 2) green building certification, 3) annual reporting on workforce diversity, and 4) bars claimants from counting employees transferred from other Illinois locations towards their employment commitments.”
Perhaps most concerning are Gotion’s alleged links to the CCP. Gotion, Inc., which signed the deal with the State of Illinois, is “wholly owned and controlled” by its parent company, Gotion High-Tec Co, Ltd., a Chinese company.
Reports on the links those companies have with the CCP have appeared in The Midwesterner, New York Post, Fox, The Daily Caller, The Daily Mail and The Tennessee Star. Among the allegations therein:
- Gotion High-Tec employs 923 Chinese Communist Party (CCP) members, including its CEO.
- Gotion, Inc. CEO Chen Li is a member of the Chinese People’s Political Consultative Conference, which is “under the leadership” of the Chinese Communist Party.
- Gotion High-Tec’s bylaws contain the following:
Article 9. The Company shall set up a Party organization and carry out Party activities in accordance with the Constitution of the Communist Party of China. The Company shall ensure necessary conditions for carrying out Party activities. The secretary of the Party committee shall be the chairman.
- Gotion High-Tec’s party secretary for its CCP committee, chairman of the board of directors, Li Zhen, led a portion of CCP member representatives, company leader groups and every level of core personnel on a road trip to Anhui province’s Jinzhai Revolutionary Martyr’s Memorial Tower, to tour the Red Army Memorial Hall and Jinzhai Revolutionary Museum. The company held thematic education activities such as the study of the 20th National Congress of the Communist Party of China and red theme education.
That same Li Zhen joined Pritzker in making Friday’s announcement.
Peter Hoekstra, who served as ambassador to the Netherlands from 2018-21 and served on the U.S. House of Representatives House Intelligence Committee, recently wrote this in connection with Gotion’s Michigan project mentioned above:
This is textbook CCP penetration of the U.S. economy on a sub-national level. They are cunning in their calculation, patient and persistent, and they utilize authoritarian efficiency as they influence our policymakers through intervening individuals and entities. Taxpayer dollars must not be invested in U.S.-based projects that will fall under Chinese government control. We must be clear-eyed about the threat and fight it….
A former counterintelligence official says it’s “100%” likely CCP will use Gotion’s Michigan battery facility for spying.
Gotion, Inc. has denied the CCP connections but, in Michigan, tempers have flared over its Gotion plant and the alleged CCP connections. The controversy reportedly “has pitted longtime friends against one another and left local leaders to wonder when, or even if, the community will be able to heal from the animosity some residents said has spread like a wildfire.”
So here we are. Electric vehicles, for which retail buyers get a tax credit, will use batteries for which a Chinese company will receive a massive bounty, charged by electricity generated with subsidized wind and solar plants, that use equipment subsidized in America or made abroad, with the electricity made available in subsidized charging stations.
That’s central planning and industrial policy at their finest.
*Mark Glennon is founder of Wirepoints
This column was updated to include GJF’s comments on how workers are faring in the subsidized factories.
Audio and summary 
If this bill passes, say goodbye to local control over all Illinois parks and expect to see open drug and alcohol use, needles, no sanitation and fire hazards, but no ordinary park users.
“linked to the CCP” is a red herring. ALL Chinese companies are directed by the Communists and everything they do is to advance their goals which is global domination. Wake up you fools.
A funny thought just hit me. Most union people I know literally hate China but at the same time they love Democrats. Funny thing all in all.
Anyone remember Foxxcon in Wisconsin? Or should I say Foxx”conned” the taxpayers and politicians out of money.
https://www.jsonline.com/story/money/business/2023/03/23/what-we-know-about-foxconn-in-wisconsin-and-how-we-got-there/70037738007/
We also have ccp spies running around on our streets in not kidding Naperville! I found one living 1 block from my daughters school. They move here and work for their Chinese company…this guy had extensive military background. The hard stare he gave me one day was chilling.
We seem to be just handing money over to the Chinese. Why can’t this deal be given to an American company?
This is where Jo’s getting millions.. and the Solar scam China already owns.. thanks to Biden cronies
This must be stopped. C’MON JOE DO SOMETHING DECENT IN YOUR life
New article in South China Morning Post about how China in particular likes Illinois, New York and California. https://www.scmp.com/economy/global-economy/article/3234280/china-dealing-more-california-new-york-washington-regional-ties-trump-political-point-scoring:
JB is the kind of guy who would be a puppet dictator for the Chinese if he were given the opportunity
I knew penny pritzker I find it hard to believe her brother could be that evil. I am concerned about this gotion company and project MUST be stopped!
It’s been said that once a person has all of the money that they could ever use that the next thing that they crave is power. There you have it.
I’ve seen no mention, in this political demagoguery, about the daily 2 million gallons of fresh water this plant will consume – the source of this enormous draw of water, and who is responsible for scrubbing it to return to potability, and which Illinois agency will have its representatives onsite to closely monitor this renegade operator. The games our pompous Illinois politicians play with our money is increasing more depressing by the day and makes it all the harder to remain here.
You don’t trust the Chinese to abide by our environmental laws?
Bingo, after all they are the biggest builder of coal fired plants while Democrats have crippled our energy policy here costing USA households thousands each year. You can’t fix STUPID, but you can vote it out of office.
Once again, so called Green at any cost. Remember Solyndra, Obama’s hand through Biden apparently still at work.
Pritzker Wants To Do A State Subsidized Deal With A Chinese Electric Vehicle Battery Company — Gotion Inc. — That Is Controlled By The Chinese Communist Party — The Same Murderous Chinese Communist Party That Has Killed Nearly 40 Million People – Center Square — How Gotion Paves The Way For Chinese Communist Party To Extend Its Malevolent Influence Into America – Daily Caller — Communist Controlled Gotion Scoops Up Blue State Tax Dollars In Illinois – Daily Caller, Fox News
Let the ” invisible hand ” go to work; no subsidies ,no tax credits
That’s not the name of the game with the UniParty grift machine.
Jack, is it stupidity or corruption ?
Yes.
Our children should never forgive them for this debt.
They’ve been indoctrinated Comrade.
I’m praying the people of Manteno and Kankakee County follow in the footsteps of the citizens of Mecosta County, MI. Allowing the CCP in our backyard yet again is appalling, though I wonder what the Chinese will learn from watching Illinois operate in near bankruptcy.
And is this the best the governor can do? Among all the vendors involved in the EV manufacturing process and that UK trade mission, he signs a sweetheart deal with the CCP? Pritzker and Biden selling out our country for corrupt deals, self-enrichment and for the satisfaction of special interests.
We must find a way to stop this.
Elect Trump.
How much are assorted Democrat run consulting firms getting out of this?
Joe mandates EVs. We buy them under duress. We subsidize them at every step of the way. We are fools.
Suckers is more like it.
Never buy an EV. Fix your current vehicle until it is no longer feasible. These EV manufacturers and the entire supply chain will go belly-up if they can’t sell those POS. They are already discounting them as anyone with half a brain avoids them.
Surely there is a thorough environmental impact study accompanying this substantial financial package.
Lithium mining is so dirty, China won’t even do it. They’re outsourcing it to other states they can coerce. Of course I can’t find the exact article I’m looking for.
https://www.reuters.com/article/china-lithium-yichun/chinese-lithium-investigation-set-to-cut-supply-idUSKBN2V10XI
https://www.euronews.com/green/2022/02/01/south-america-s-lithium-fields-reveal-the-dark-side-of-our-electric-future
A nearly 40M metric ton lithium deposit has apparently been discovered along the Oregon-Nevada border. This would place the US squarely as the dominant producer globally. However, it is also considered a sensitive Indian tribal area, so let’s see how the Federal and State Democrats balance the environmental, capitalist and social justice scales. I’m betting on failure on all fronts.
Apparently our elected and appointed Illinois officials don’t “do math” – ever. They seem to have little math competency, and ignorant of basic financial accounting matters, including our billionaire-heir governor.
That said, does the Pritzker-owned corporations have any financial interest in this CCP company? They certainly benefited from the Covid programs.
Most of the Chinese enrolled at UIUC are connected directly or indirectly to the CCP and/ or PLA. It’s been happening in IL for some time now. Democrats, true to the cult that they are, just count the $$$. Other states, mostly Red States, have wised up and stopped much of the Chinese spy activity.
Fantastic article Mark!!! The bottom line is with Dem convention in Chicago just around the corner, JB and dem machine are desperate to appear the dem party is still the party of blue collar manufacturing union America that they are willing to desperately pay the CCP/Gotion big bucks to setup shop in Illinois, partially at taxpayer expenses. Astoundingly, even with all the subsidies CCP/Gotion’s the only taker Illinois can get. while a rep Indiana, for example, is opening EV plants left and right. Pathetic!! Next, It will be interesting to see if JB will bailout UAW in Belvedere via offering… Read more »
What, Democrats doing business with America’s enemies? I’m shocked, shocked I tell you.
GR8 research & article, Mark!!
Fed’l and state govts spending our tax $ this wildly will end badly. It’s already (over the past few years) crushed a significant % of our prosperity for most ppl who do not work for govt, or are not govt retirees. It’s an evil and irresponsible road these honchos in govt have detoured to. They’ve ditched their basic functions.