WASHINGTON, Oct 23 (Reuters) - A subsidiary of Chinese

battery company Gotion has abandoned a plan to build a $2.4

billion plant in Michigan to produce key materials for electric

vehicle batteries, the state said on Thursday.

The plan, first announced in October 2022, was expected to

create 2,350 factory jobs but came under criticism from some

lawmakers for the company's Chinese ownership.

The Michigan Economic Development Corporation (MEDC) said

none of a $125 million state grant for the project was ever

disbursed and it will pursue repayment of another $23.6 million

state award that went toward purchase of the property.

Germany's Volkswagen is the largest single

shareholder in Gotion Inc's parent company, owning about 30% of

Gotion High-Tech. U.S. lawmakers said last month

China maintains "effective control" through multiple individual

shareholders.

Gotion Inc's head of corporate and public affairs, Benjamin

Howes, would not address specific questions on the plant but

said in a statement the firm "remains firmly committed to its

mission of driving America's clean energy future" including at a

plant in Illinois.

Volkswagen was not available to comment.

In March 2024, Gotion sued Green Township in Michigan for

allegedly breaching an agreement to build the plant.

The MEDC last month sent Gotion a letter saying it was in

default on its grant agreement because there had been no actions

on the project site in more than 120 days. The state had given

Gotion 30 days to resolve the default.

A lawyer acting for Gotion Inc said in a letter to the MEDC

seen by Reuters that it was "utterly false" to accuse the

company of abandoning the project.

He added because of a "barrage of attacks that Gotion has

had to endure at this site" and Green Township's opposition,

that a better course of action was to suspend the default for

six months to have "an open and candid discussion about the

viability of the project and the long-term plan for this site."

Over the last year, Americans' waning enthusiasm for

electric cars led automakers to delay or scrap factory projects.

After recent EV policy changes by the Trump administration,

automakers are further retrenching.

Representative John Moolenaar, a Michigan Republican who

chairs a select committee on China, praised the withdrawal of

state support for the project. He had worked with residents in

Green Township to oppose the project and bar U.S. government

subsidies for Chinese-affiliated battery companies like Gotion.