Last Thursday Illinois Governor Pritzker signed a deal to give Gotion Incorporated, a Chinese company, $536 million in tax incentives to open an electrical vehicle battery-assembly plant in Manteno, Illinois.
Gov. Pritzker has been trying to attract electrical vehicle battery manufacturers for a few years to prove his progressive bona fides on green energy. It’s not been easy.
To help attract business, in 2021 Pritzker signed into law new tax credits for EV businesses which Crains Chicago Business said were “massive incentives” that may be the “largest ever in the state’s history.” But 10 months later, Illinois was still 0 for 18 in attracting EV battery plants: “Even Rivian, which assembles electric-powered trucks in downstate Normal, chose Georgia for its first battery plant.”
So earlier this year, Pritzker asked the legislature for even more incentives to get business here including a deal-closing fund that he could use to sweeten the pot. Last week, that honey pot of tax incentives was finally enough to attract a $2 billion investment in an EV battery plant to the state.
Here’s the problem, the owners of Gotion are Chinese Communists. The president of Gotion, Chen Li, whose signature is on the paperwork, is a member of the Chinese People’s Political Consultative Conference, an important part of the Chinese Communist Party.
Li is also affiliated with the World Economic Forum, a global organization focused on the “Great Reset” whose watch words are “equity” and “sustainability” in the marketplace.
His father, Zhen Li, founded Gotion Energy Company in 2006 and has a long history with the CCP. Zhen Li remains a prominent member of the Chinese parliament, Anhui Province parliament, and a city councilman of Hefei City.
Also concerning is that EV companies are an integral part of China’s long-term One Road One Belt strategic plan to control critical infrastructure and industries around the world.
China holds all the cards right now on EV battery manufacturing. As the Coalition for a Prosperous America reported, China is overproducing EV batteries, will glut the market with excess batteries, and force lower prices. Kenneth Rapoza wrote, “sounds good if it makes EVs more affordable, but what is more likely to happen is that China’s oversupply in this market will put rivals out of business. It will surely make it next to impossible for a U.S. EV battery maker to enter this market.”
The CPA article also notes, “China has a 10- to 15-year head start on the rest of the world when it comes to making EV batteries,” analyst Chris Berry from House Mountain Partners told Marketplace, a public radio show focused on global business stories.
So, if China already has a competitive advantage in EV batteries, why locate in the U.S. and Illinois? Rapoza answers that question, saying. “China has the full supply chain in its sights, not unlike the solar industry, which China dominates in spades.”
Further, the Inflation Reduction Act has tax incentives for battery manufacturers in the United States making it a requirement to locate here in order to get into the EV market.
One of the biggest incentives for EV battery production is the federal $7,500 tax credit for purchasing an electric vehicle. Illinois has an additional $4,000 EV tax credit, and Gov. Pritzker and his green energy legislators have set as a goal 1,000,000 EVs in Illinois by 2030. There’s no way that happens, but it is even less likely without massive subsidies.
As The Verge reports, however, the federal tax credits have some strings attached:
“Under the new rules, [excluded after December 31, 2023 are] EVs with battery components sourced from “foreign entities of concern,” like China, where the vast majority of battery parts and minerals come from…The bill would require batteries to have at least 40 percent of materials sourced from North America or a US trading partner by 2024 in order to be eligible for the tax break. By 2029, battery components would have to be 100 percent made in North America.”
So, China is playing the long game and knows it must locate plants in the U.S. It is grabbing onto tax breaks and securing the market advantage that they currently have long into the future, all at the expense of Illinois and U.S. taxpayers.
Illinoisans should be very concerned about this handout to a Chinese company as no Chinese company is private. They operate as stateowned enterprises even though they have international partners. The Daily Caller reported that Gotion, Inc is “wholly owned and controlled by Gotion High-Tech Power Energy Co.” and that the “Hefei-based parent company is led by a CCP member and employs hundreds more of them.”
The Chinese are also intent on buying up U.S. farmland including land surrounding critical road intersections. The Manteno location makes sense for any company as it is only 30 miles from the largest inland port in the United States making for more efficient operations to move heavy EV batteries to auto manufacturers. It is also has national security concerns for that very same reason.
Being open to foreign investment doesn’t mean we give massive tax breaks to our adversaries that steal our technology, help manufacture fentanyl, and released COVID-19. Illinois legislators should file legislation immediately to revoke this agreement and prevent any further awarding of generous tax incentives to companies not controlled by American owners or owners with citizenship and allegiance to close allies.