April 14, 2009 / 4:35 PM / 11 years ago

UPDATE 2-Johnson Controls, others plan U.S. battery plants

* LG Chem, Dow Chemical, A123 also plan Michigan plants

* Investment commitments total $1.7 billion

* State of Michigan to offer $543 mln in tax credits (Adds A123, LG Chem, Dow Chemical plans, background, byline)

By Soyoung Kim

DETROIT, April 14 (Reuters) - Major battery suppliers, including Johnson Controls, detailed plans to invest up to $1.7 billion in advanced battery plants in Michigan, taking advantage of tax credits intended to lure production of technology seen crucial to the turnaround of the U.S. auto industry.

South Korea’s LG Chem (051910.KS) and a partnership between Johnson Controls Inc (JCI.N) and France’s Saft S1A.PA said on Tuesday they will build their first U.S. plants in Michigan to supply lithium-ion battery cells for hybrids and electric vehicles.

LG Chem, which plans to invest $200 million in the proposed facility, is supplying batteries for General Motors Corp’s (GM.N) Chevrolet Volt plug-in hybrid, a heavily-touted car slated to hit showrooms in late 2010.

Johnson Controls-Saft is planning a $220 million plant after winning a contract to build batteries for Ford Motor Co’s (F.N) first plug-in hybrid due out in 2012.

Separately, U.S.-based A123 Systems, which is supplying batteries for a range of electric vehicles being developed by Chrysler LLC [CBS.UL] and China’s SAIC (600104.SS), said it will locate its planned $600 million battery plant in Livonia, Michigan.

The joint venture of Dow Chemical (DOW.N), Kokam America Inc and Townsend Ventures LLC also plans to invest $665 million for a lithium-ion battery plant in Michigan.

The state of Michigan is offering a combined $540 million in tax credits to the four companies, which will bring more than 6,600 new jobs to the battered home state of the Detroit-based automakers.

At 12 percent, Michigan’s unemployment rate is the highest in the nation. In Detroit, the jobless rate is 22 percent, almost three times the national average.

Automakers, parts suppliers and dealerships have lost more than 400,000 jobs over the past year as Detroit’s automakers cut costs to survive a brutal downturn.

GM, Ford and Chrysler are racing to develop plug-in hybrids and other electric vehicles as they battle a deep slump in U.S. sales that has driven the industry to the brink of failure.

President Barack Obama has expressed strong support for advancing hybrid technology and alternative fuels to reduce gasoline consumption, to cut tailpipe emissions and to lift U.S. automakers and their suppliers out of their worsening financial troubles.

Production of lithium-ion battery cells is now dominated by Japan, South Korea and China.

The U.S. government has set aside $2 billion under the U.S. economic stimulus package to support advanced battery technology. (Additional reporting by Kevin Krolicki; Editing by Brian Moss)

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