A Michigan electric vehicle battery company that pocketed $900,000 from taxpayers six years ago will keep the cash without penalty as it moves production and 188 jobs to South Carolina.

It’s the latest example of Gov. Gretchen Whitmer’s flawed attempt to force Michigan residents into transitioning from internal combustion engine vehicles to electric-battery operated cars and trucks in which billions of taxpayer dollars have been used to subsidize a nascent industry.

Akasol. Inc., a subsidiary of BorgWarner, will lay off a total of 188 workers when it closes two separate plants in Hazel Park and Warren on April 14, to shift production of lithium-ion batteries south to enable the company to “grow above market,” the company said in a statement to the Detroit Free Press.

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“Consistent with those efforts, we have decided to shift all battery production from our Hazel Park and Warren, Michigan, locations to our existing plant in Seneca, South Carolina,” the statement read. “We believe in our battery product portfolio and the opportunity for continued growth as customers increasingly require innovative e-mobility solutions.”

Akasol was approved in 2019 for a $2.24 million Michigan Business Development Program grant to build a $40 million manufacturing facility and create 224 jobs, but the taxpayer funding was later amended to $900,000 when the plan was scaled down to 90 jobs, MLive reports.

Akasol fulfilled its agreement by maintaining the 90 jobs through 2023, which means the company can keep the incentives while it abandons its Michigan operations.

Company officials refused to discuss whether it will offer jobs to the Michigan workers in plans to lay off.

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“We cannot go into specifics on personnel matters, but we aim to affect the fewest number of people possible,” a spokesperson wrote in an email to MLive.

“All affected employees have been notified of their separation dates and that their separation from employment will be permanent,” Akasol Plant Manager Scott Crouthamel wrote in a notice to the Michigan Department of Labor and Economic Opportunity. “Those employees are expected to be separated from employment beginning on April 14, 2025, with all separations accomplished by July, 2025.”

The Feb. 11 notice came a day after Gov. Gretchen Whitmer announced plans to increase the state’s business tax as part of her plan to address a $3.9 billion annual road funding shortfall.

The governor’s office has not divulged how much Whitmer wants to increase the state’s 6% corporate income tax to generate the $1.6 billion she’s hoping to realize, but the Detroit Regional Chamber suggests the rate would need to hit 8% to generate that revenue, putting the state among the highest in the nation.

South Carolina’s corporate income tax is 5%, according to the Tax Foundation.

“This increase penalizes the entire economy and creates a new challenge for doing business in Michigan,” Detroit Regional Chamber officials told MLive. “While the Detroit Regional Chamber thanks Whitmer and Speaker (Matt) Hall for seeking a long-term solution for road funding, that conversation needs to focus on user fees instead of giving more reasons to do business elsewhere.”

Akasol is among several companies feeding the EV industry that have rolled back or canceled plans in Michigan, including several that received taxpayer-funded business incentives in recent years.

House Republicans are working to call back taxpayer subsidies awarded to Ford for its BlueOval electric vehicle battery plant in Marshall after the U.S. Department of Defense blacklisted the Chinese company it partnered with for the venture – Contemporary Amperex Technology Co., Ltd.

The project was initially granted $1.7 billion in taxpayer funded incentives, but that figure was reduced by roughly 60% when Ford scaled back plans last year.

“These latest developments underscore what I’ve been saying all along — projects like this require much stricter oversight,” state Rep. Sarah Lightner, R-Springport, said in a statement. “We must have safeguards in place to protect taxpayers from financial risks and national security threats. If a project is tanking, or it turns out to have ties to a questionable company, we need the ability to claw back those funds and redirect them to better uses.”

General Motors also announced in February it’s backing out of a joint venture with South Korea’s LG Energy Solution to create thousands of jobs at an Ultium Cells battery plant near Lansing that came with $600 million from taxpayers.

“State records obtained by The Detroit News indicate the entire performance-based grant was paid out by the Michigan Treasury Department to GM and its partner in an EV battery plant between June and September 2023, more than a year before the Detroit automaker announced Dec. 2 that it would sell its stake in the Lansing area battery plant that had received part of the grant,” the news site reports.

Another $715 million taxpayer funded grant to Gotion, Inc. to build a battery component plant in Mecosta County also remains tied up in litigation and public opposition over the company’s close ties to the Chinese Communist Party.

Sam Abuelsamid, vice president of market research at Telemetry Insights, told the Detroit Free Press the issues with Michigan’s EV battery deals aren’t uncommon, noting others producing batteries for the commercial market have also struggled or folded.

“It’s a tough business. Everything around the EV business is challenging. Until you get to a certain level of scale, the R&D costs are extensive,” Abuelsamid said. “BorgWarner is a big company, but if they don’t see a near-term return on investment with all the other challenges around the industry right now, if they need to cut costs somewhere, the stuff that’s likely to take a longer return on investment is likely to be sacrificed in the near term.”

Michigan’s problems, however, extend well beyond EV issues to the state’s economy more broadly, with numerous companies announcing layoffs for 2025.

After 79 years as a “significant player” in the automotive industry and others, Michigan Spring & Stamping also announced in February it’s shutting down its Muskegon operations and laying off 116 employees.

In total, 14 large companies are scheduled to lay off 1,830 workers in nine counties over the next two months, compounding problems for a state where 45,000 lost their jobs in 2024.