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Federal Court Sides Initially with Maintaining Michigan EV Development Agreement.

In October 2022, Gotion, Inc., a large company based in clean energy technology, announced plans to develop a factory for making electric vehicle (“EV”) battery components in Green Charter Township, Michigan.  Over a year later however, Gotion filed suit against the Township in federal U.S. District Court, alleging the Township breached an agreement executed with prior board members over the proposed development project.  Gotion also moved for a preliminary injunction, which the federal court recently granted on May 17, 2024. In the court’s ruling, it requires the Township to comply with contractual obligations for Gotion’s development project.

While the injunction is in place only during the pendency of the lawsuit, it is an initial win for the EV developer. According to Gotion’s lawsuit, it reached an agreement in August 2023 with the Township to develop its factory for EV components.  Shortly thereafter, the Township recalled and replaced board members who preivously supported the project and participated in executing the agreement.  With a new board composed of 7 members, it voted 5-2 to rescind said agreement with Gotion.

It follows, Gotion premised its federal lawsuit on breach of contract and quickly sought an injunction against the Township.  In Gotion’s complaint, it alleged as part of the agreement, the Township is contractually required to assist the company in “obtaining the necessary governmental authorizations” for the proposed development.  In granting Gotion’s preliminary injunction, the court is requiring in part that the Township assist Gotion, to the extent legally permissible, in obtaining licenses, permits, and other governmental authorizations necessary to advance the project, along with execute necessary tasks as stipulated under the development agreement.

Back when Gotion first announced its plan to build an EV factory in Michigan, Governor Whitmore publicly stated her support for the development project.  In an effort to maintain itself as a leading state in the production of green and renewable energy, Michigan’s state legislature passed multiple clean energy laws in the fall of 2023. Accordingly, Michigan is positioning itself as a favorable area for the clean energy business. Gotion and other similar businesses have received state-backed incentives for EV manufacturing. However, as Michigan continues to shift towards the renewable energy market and grow its electric vehicle industry, such changes have been met with opposition in some areas.

Apart from rescission of prior agreements, the clean energy business in general has experienced push back in areas of land use and zoning as well.  Just recently, attempts to put forward a 2024 ballot initiative to reverse House Bill 5120 failed.  The bill enacted in November 2023, transferred authority over large-scale wind and solar projects to state regulators, as opposed to local governments. While the initiative failed to collect enough required signatures to make it onto the 2024 ballot, it nevertheless is a reminder of continued obstacles solar and EV companies may encounter. If you have any questions or require assistance about EV development and maintenance, renewable energy advocacy, or land use/zoning, please contact Dalton & Tomich at (313) 859-6000, or [email protected].  One of our attorneys experienced in these areas would be happy to speak with you.

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