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Michigan Passes $517.5M Tax Credit Package for Manufacturers of Plug-in Traction Batteries

Hb6612
Elements of the plug-in battery pack tax credit package. Click to enlarge. Source: Michigan Senate.

The Michigan Senate on Friday approved a package of up to $517.5 million in tax credits designed to encourage the manufacture of plug-in traction batteries in the state. The House had already approved the bill, HB 6611.

The package provides credits in four separate areas: assembly of battery packs with a minimum capacity of 4 kWh; engineering for pack integration into the vehicles; engineering for advanced battery technologies; and capital investment expenses for manufacturing facilities.

Pack assembly. The package provides up to $197.5 million for tax years 2011 through 2014 for battery packs based on a minimum credit for the 4 kWh threshold, with additional credit provided per additional kWh.

Battery Pack Assembly Tax Credit Schedule
Tax year Base credit
(4 kWh)
Add. credit
(per kWh)
Max. Pack creditMax. total packs
2011 $500 $125 $2,000 20,000
2012 $375 $93.75 $1,500 40,000
2013 $375 $93.75 $1,500 40,000
2014 $375 $93.75 $1,500 25,000

Integration engineering. The package offers up to $15 million in credits each year from 2012-2017 ($90 million total) for expenses for vehicle engineering in Michigan to support battery integration, prototyping, and launch expenses.

Engineering for advanced technologies. The package provides up to $10 million in credits each year from 2012-2014 ($30 million total) to support increases in engineering activities in the state to develop advanced automotive  battery technologies. Increases in engineering expenses are measured against 2008 engineering expenses.

Capital investment. The package provides up to $50 million per year from  2012-2015 ($200 million total) for capital investment expenses for the construction of an integrative cell manufacturing facility that would include anode and cathode manufacturing and cell assembly.

Resources

Comments

HarveyD

Excellent pro-active program. Similar programs, if inacted in more States, would do much to promote local-national mass production of affordable advanced batteries for future e-vehicles.

USA certainly has the know-how, facilities, labour, funds and the market to produce 20+ million modular battery packs a year to meet the requirements of future HEVs, PHEVs and BEVs.

Ramping up production should not represent a major challenge if mass production is supported and done in 10 to 15 States using all the best current and future technologies.

There are no reasons why USA could not become an advanced batteries exporting nation instead of importing fossil fuel.

ExDemo

I concur. But automating cell manufacture is the new manufacturing technology that needs to be developed. You cannot just go out and purchase a battery cell automation line like a machining center line. They don't exist, yet.

US battery designers like A123 are ceding that manufacturing knowledge to Asian companies and providing them with the secrets of their battery designs. Predictably they will end up with neither the latest designs nor the knowledge to manufacture them on mass scale. Mass manufacture of cells is somewhat analogous to printing, and should not be labor intensive, but will be capital intensive.

In today's environment, it was easy to secure real estate financing, for even with the most stupid deal, but very difficult to acquire investment money for capital manufacturing equipment.

Seed financing and loan guarantees are what is needed there, and here is why.

Bankers ask what good is the modern manufacturing equipment itself, as collateral? Who can they resell it to, unlike a foreclosed piece of Real Estate. What is the scrap metal value is where they usually end up, as the equipment is so illiquid and so difficult to dispose of in a bankruptcy. That makes equipment loans difficult to obtain.

Alberto Gorb

A state knocking at the bankruptcy door, due to their reckless taxation and spending policies, should not be throwing around even more money. Michigan, cut back on your burdensome tax policies that drive business to other states. Allow business to thrive in your state nad they will come.

HarveyD

ExDemo:

You are correct and that's why local-national large automated battery plants should be helped to start up if we want to mass produce affordable advanced baterries in USA.

a.b

Another step toward state( u.s.a) communism where new products and new players are put aside and where state is always the one we deal with. If a car manufacturers will not be own by state, we will have better quality and new technology with a car powered by a water electrolyser put inside the car to make hydrogen while driving and say adios to petrol and pollution and high running cost.

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