report

A roadmap for Michigan’s electric vehicle future

An assessment of the employment effects and just transition needs

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Chapter 1

Context: Assessing Michigan’s current efforts to lead the EV transition

In this chapter, we first describe the initiatives and actions that Michigan has taken to position itself as a national leader in the production and adoption of EVs. Next we describe the challenges that the state will need to address to grow its EV industry and create high quality jobs while enabling an equitable transition.

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The evolving EV policy landscape in Michigan

Policymakers in Michigan have already taken several significant steps to ensure that the state emerges as a global and national leader in the production and deployment of EVs.

In 2020, Governor Gretchen Whitmer created the Office of Future Mobility and Electrification (OFME) and the position of chief mobility officer, entrusted with the responsibility of working across the state government, the private sector, academia, and other entities to boost the state’s mobility ecosystem.4 OFME is housed within the Department of Labor and Economic Opportunity (LEO) and works in partnership with the Michigan Department of Transportation (MDOT); Department of Environment, Great Lakes, and Energy (EGLE); and the Michigan Economic Development Corporation (MEDC) to align initiatives across departments that focus on economic development, workforce and talent, transportation, the environment, and infrastructure growth.

In addition, Michigan established a Council on Future Mobility and Electrification (CFME) to serve in an advisory capacity to OFME, the governor, and the legislature and provide annual recommendations on how Michigan can continue to be a leader in mobility and electrification (CFME 2021).

The Michigan Future Mobility Plan, developed by OFME and CFME and released in September 2022, provides a three-part strategy to grow the mobility workforce, provide more accessible transportation infrastructure, and develop innovative mobility policies (MEDC 2022c).

Michigan also unveiled a Healthy Climate Plan in April 2022 which lays out the state’s vision to achieve economy-
wide carbon neutrality by 2050. The plan identifies transportation electrification as an essential decarbonization strategy to reach state goals, with the objective of installing 100,000 EV chargers and infrastructure to support two million EVs by 2030. Michigan will target EVs to account for at least 50 percent of light-duty vehicle (LDV) sales, 30 percent of medium- and heavy-duty vehicle sales, and 100 percent of public transit vehicles and school buses by 2030 in pursuit of that goal (EGLE 2022).

The Michigan governor’s proposed fiscal year 2024 budget to the state legislature includes several significant investments in the EV ecosystem, including $150 million in matching grants to school districts to switch to electric buses; $65 million to expand EV charging infrastructure access; $45 million for the Michigan Clean Fleet Initiative to support local governments and businesses in transitioning their vehicle fleets to EVs and clean fuels; $48 million for sales tax incentives for the purchase of new, used, or leased EVs; $15 million for the creation of a critical mineral recycling research hub; $35 million to help small manufacturers address their workforce needs; and $25 million to upgrade equipment in vocational education and career and technical education training centers (OOTG 2023). If these investments are approved by the state legislature, they will further help Michigan in growing its EV industry and accelerating EV adoption.

While a detailed listing of initiatives across Michigan departments is included in Appendix A, Table A-1, we highlight a few here. The availability of a skilled workforce is critical for the EV transition to be successful. Michigan has launched mobility-focused workforce initiatives such as the Electric Vehicle Jobs Academy and the Mobility Talent Action Team to identify EV-related occupational skills needs and to align education and training programs with the most critical workforce needs of the private sector. In addition, the state’s “Sixty by 30” educational goal—for 60 percent of adults to have a postsecondary degree or credential by 2030—is geared toward addressing the state’s long-standing skills gap. In 2021, Michigan created the Strategic Outreach and Attraction Reserve Fund (SOAR Fund) with a $1.1 billion appropriation to enable it to compete with other states for corporate investments, including those in new EV and battery plants.5 Beyond EV manufacturing, Michigan is also spearheading initiatives to get more EVs on the road, including the Charge Up Michigan Program to build direct-current fast-charging stations and the Lake Michigan EV Circuit to build a network of charging stations around Lake Michigan.

The private sector is responding by making new investments in Michigan.

The “big three” automakers—Ford, Chrysler Stellantis, and GM—are going all in on EVs, having announced a joint goal for EVs to meet 40–50 percent of their total vehicle sales by 2030 (Lambert 2021). Already, Ford’s facility in Dearborn is producing the F-150 Lightning pickup, Stellantis’ plant in Detroit is producing the Jeep Grand Cherokee 4xe, GM’s plant in Lake Orion is producing the Chevrolet Bolt and will shift to producing other electric vehicles in the coming years, and GM’s Factory ZERO in Detroit/Hamtramck will produce the GMC Hummer EV pickup and sport utility vehicle (SUV), the Chevrolet Silverado EV, and the electric shuttle Cruise Origin.

Michigan is also receiving its share of investment in battery research and development (R&D) and manufacturing. In 2021, Ford established a Global Battery Center of Excellence in southeast Michigan while GM announced the building of the Wallace Battery Cell Innovation Center in Warren, Michigan, to accelerate the development and commercialization of longer-range and more affordable batteries. In the first 10 months of 2022, Michigan attracted $8.5 billion of investment in battery manufacturing, including investments by GM, Chinese battery maker Gotion, Michigan-based EV battery startup Our Next Energy, and South Korean LG Energy Solution (Gardner 2022a). Michigan, along with Georgia, Kentucky, and Tennessee, is expected to see the largest growth in battery manufacturing capacity by 2030 based on plans currently in place (Gohlke et al. 2022).

Michigan has also been successful in attracting investments in microchip research and manufacturing, which are crucial components in EVs and whose importance to the growth of the EV industry was recently highlighted by the global chip shortage, which crimped auto production and sent vehicle prices soaring. Michigan is among the top states in semiconductor manufacturing along with Arizona, California, New York, Ohio, and Texas. Companies already operating in this space in Michigan include SK Siltron; Calumet Electronics; Hemlock Semiconductor; and KLA Corp., which opened its second US headquarters in Ann Arbor, Michigan, in 2021 (Gardner 2022b).

Federal legislation passed in 2021 and 2022, including the IIJA, IRA, and CHIPS Act, are further poised to accelerate the EV transition in Michigan and nationally.

See Appendix B, Table B-1, for a longer discussion of the impacts of these laws. The IRA, in particular, provides significant incentives for consumer adoption of EVs and promotes domestic manufacturing of EVs and battery supply chains. The IIJA includes significant funding for building a national network of EV charging stations, identified as a key impediment to the wider adoption of EVs, while the CHIPS Act is expected to boost semiconductor research, design, and development. Leveraging the funding and programs contained in these three federal laws could further enable Michigan to strengthen its economic competitiveness, grow its economy, and create good-paying jobs.

Challenges facing Michigan

Despite the advantageous position that Michigan holds in growing its EV industry and ecosystem, the state cannot afford to become complacent. Michigan’s existing assets and policies are not going to be sufficient to either support the growth and investment the state desires or produce just and equitable outcomes for workers, communities, and EV consumers. Michigan will need to contend with external challenges and address several internal weaknesses.

The external challenges relate to competition among US states to attract corporate investments. While states have been competing for decades, the scale of competition for landing EV assembly, battery manufacturing, semiconductor factories, and other mega projects has intensified in the last few years. Figure 1 shows EV-related private sector investments across the country, which have the potential to create thousands of jobs.

One way that states have been trying to attract companies is through economic development incentives and subsidies.6 Between the start of 2021 and October 2022, at least $50 billion of investment to build EV assembly and battery facilities have been announced across 10 states that have given out at least $10.8 billion in subsidies (Coppola 2022b). States have defended their use of incentives to stay competitive against other states. However, concerns have been raised in academia and policy circles that these incentives are wasteful, encourage a race-to-the-bottom effect, and are not needed since most companies would make a similar location decision even without the incentive (Slattery and Zidar 2020; Bartik 2018).7 When incentives are provided, they should be carefully targeted and designed to maximize benefits and reduce costs for states’ economies (Bartik 2015).8

Figure 1 | EV-related investments across US states

Notes: Data are current as of January 24, 2023. OEM = original equipment manufacturer.

Source: Data provided by the Zero Emission Transportation Association to the authors.

Irrespective of the merits or demerits of these incentives, Michigan is competing for EV-related investments with several other states, including Georgia, Illinois, Kentucky, Ohio, and Tennessee. Michigan is already well-positioned to grow its EV industry due to its history as a center of automobile R&D and manufacturing, and its ongoing efforts to tackle various challenges related to manufacturing, EV adoption, charging infrastructure deployment, and workforce and skills development (see Appendix A). The more Michigan can strengthen the building blocks of its EV ecosystem (i.e., innovation, workforce and talent, infrastructure, and institutions), the better placed it is likely to be.

The goal of this report is not to justify the benefits of the EV transition for Michigan at the expense of other states or to present state industrial policy as a war among states. If approached in the right way, the EV transition can be a race to the top rather than a race to the bottom, and in the context of a fast-growing EV industry, all states can benefit.

Beyond the external challenges, Michigan will also need to address three key internal challenges:

  1. Ensuring the state is attractive for new and expanding companies, including by scaling up the availability of trained technical workers to meet the needs of the growing EV industry

Site selection by companies involves myriad factors including site and infrastructure availability, utility costs, regulatory environment, access to materials and suppliers, proximity to auto-related innovation and knowledge clusters, and, importantly, the availability of a skilled workforce.

The production of EVs is significantly different from that of ICE vehicles, and EVs will expand the automotive industry’s focus from mostly hardware to also include software. GM, for instance, is planning to position itself as a technology platform company instead of defining itself as just an automaker as it makes the transition to EVs and connected vehicles (Glazer 2022; Klayman and Lienert 2021). This transition will force GM and other automakers to attract and retain highly technical engineers, designers, and other professionals who research, design, develop, and commercialize new technologies to meet the needs of an increasingly connected and electrified transportation future. As a result, there will be growing demand in EV and battery manufacturing for research scientists, software developers, engineers and engineering technicians, industrial designers, and other technical talent, many of these positions requiring at least a bachelor’s degree.9 Not only will Michigan’s educational institutions, including its four-year institutions and community colleges, need to educate and train this highly technical workforce, but the state will also need to market itself as an attractive location where talent wants to move.

On both fronts, Michigan needs to do more. Despite being home to highly ranked colleges, Michigan is producing far fewer bachelor’s degree graduates in science and engineering per thousand inhabitants compared with other states (Figure 2). Furthermore, even though Michigan is the leading state in engineering occupations, it lags other states in attracting software and computer professionals critical to the EV industry (Figure 3). Michigan also needs to evaluate which EV-related jobs do not require a college degree and put in place training and career development opportunities for non-college-educated job seekers. Currently, Michigan’s automakers and parts manufacturers are struggling to hire and retain workers, with some analysis finding that there are now more vacant positions than qualified applicants (Keys and Paxson 2022).

Figure 2 | Degrees in science and engineering by state

Source: NSF n.d.

Figure 3 | Availability of technical talent for the growing EV industry, by state

Source: BLS 2021a.

According to findings presented to the Michigan Economic Development Corporation by the Boston Consulting Group, other site selection challenges facing Michigan are the lack of big, ready sites for new automotive companies to locate EV assembly and battery manufacturing facilities, and high utility costs for power-intensive battery manufacturing facilities.10

  1. Accelerating the pace of EV adoption and building 
the required infrastructure

Michigan’s EV adoption currently lags that of other states (Figure 4), which can be largely explained by the absence of robust transportation electrification policies to boost EV deployment (Howard et al. 2021). In 2021, Michigan ranked 29th among 30 states assessed in terms of policies to scale up deployment of EVs and progress in building the necessary charging infrastructure (Howard et al. 2021). Michigan has relatively high electricity prices at 17.90 cents per kilowatt-hour (¢/kWh) for residential customers compared with a national average of 15.95 ¢/kWh (EIA 2022c). This makes it more expensive for consumers to use EVs and can potentially delay the transition. However, it is worth noting here that California, Hawaii, and states in New England all have higher residential electricity rates and higher EV adoption per capita than Michigan, indicating that policies and average incomes interact with relative prices of energy to influence EV adoption.

Figure 4 | EV registration by state

Sources: Doll 2022; Census Bureau 2021.

In addition to the emissions reduction and health benefits of switching to EVs, higher rates of EV adoption can bring economic benefits as consumers save money from the EV’s reduced cost of ownership and thus can spend more on local goods and services, among other things. Despite the higher upfront price of an EV, new research finds that financing and owning an EV is cheaper on a monthly basis compared with financing and owning an equivalent ICE car (Orvis 2022).11 The upfront prices of EVs are expected to soon become cheaper than ICE vehicles as well (ANL 2022). Still, current EV buyers are typically high-income and highly educated homeowners (Hardman et al. 2021). As Michigan works toward accelerating EV adoption, equitable access to auto financing and EV charging infrastructure will be critical for ensuring low-income households, including those in disadvantaged communities, benefit from transportation electrification.

Greater adoption of EVs will also trigger needed infrastructure deployment, which can create new careers in charging infrastructure manufacturing, installation, and maintenance and provide thousands of good jobs for trade workers, including electricians. Moreover, growth in EV adoption will impact Michigan’s power sector by increasing annual electricity demand. It will be necessary to increase overall generation capacity, which can be achieved cost-effectively by adding renewables into the grid, as well as invest in grid modernization to accommodate varying types of charging, times of day when charging is used, and geographic distribution of the charging load (Gagnon 2022). All these investments can significantly boost job creation in the power sector.

Finally, as Michigan vies with southern states such as Alabama, Georgia, Kentucky, and Tennessee to attract EV-related investments, it can differentiate itself from those states by leaning in on EV adoption. None of these other states are adopting robust policies to spur EV adoption; rather, they are responding to the demand created in other states.

  1. Navigating the EV transition in a way that creates quality jobs and produces equitable outcomes for its longtime autoworkers and communities

Working in the auto industry was once a ticket into the middle class, and the sector has a particularly high representation of Black workers and those without four-year college degrees. However, US auto workers have witnessed an erosion in wages and working conditions in recent decades. Adjusted for inflation, average hourly wages for production and non-supervisory workers in motor vehicles and parts manufacturing decreased by 17 percent between 1990 and 2018, compared with an 18 percent increase over the same period in the total private sector (BLS 2020). Annual wages for Michigan’s auto manufacturing workers have declined in recent years and were significantly below the national average in 2021 (Figure 5). Workers in Michigan’s auto parts manufacturing, however, earn much more than the national average.

Figure 5 | Wages in Michigan’s auto sector

Source: BLS 2021b.

Higher levels of unionization have been found to lead to better wages and working conditions for workers (Banerjee et al. 2021). However, auto companies have resisted unionization for decades and several have located their manufacturing plants in the southern United States, where every state is a right-to-work state, making it harder for workers to form unions and collectively bargain for better pay and working conditions (Ferris 2021; Nassar 2022). Michigan was also a right-to-work state up until March 2023, with union membership falling from 16.6 percent in 2012 when Michigan adopted right-to-work to 14 percent in 2022 (BLS 2023). Many jobs created in the past decade have been non-union and temporary jobs, with lower wages and benefits and fewer job protections (NELP 2022; Walter et al. 2020; Burton et al. 2022; Wayland 2022). The transition to EVs has made battery manufacturing a critical part of the automotive manufacturing process, but wages in the sector can lag those in traditional automotive assembly by almost a third (Coppola 2022a).

The United Auto Workers’ unionization of a GM battery plant in Ohio signals a potential shift. However, concerns remain that the downward trajectory in job quality in the auto industry will continue unless there is a just transition from ICE vehicles to EVs that also prevents disproportionately impacting historically disadvantaged communities and people most likely to be harmed by the transition, including Black workers and those with less education.

Overall, the shift to a clean energy economy, including electric vehicles, is also occurring against the backdrop of long-standing environmental and economic inequities that have disproportionately harmed certain communities, including Black, Indigenous, and other people of color, as well as low-income individuals. Michigan will need to ensure that inequities built into the current system are not carried over into the future and communities hosting EV-related facilities benefit positively from the economic, social, environmental, and health impacts of those projects while communities facing closure of legacy auto facilities are provided adequate support to navigate the transition.

The policy recommendations outlined in “Recommendations for Michigan policymakers: Seizing opportunities, addressing challenges” are geared toward addressing the above key challenges.

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