A roadmap for Michigan’s electric vehicle future

An assessment of the employment effects and just transition needs

Endnotes

  1. We round numbers to the nearest thousand. The total may not be equivalent due to rounding. Exact results can be found in Appendix D.
  2. The total net effects presented here do not include the jobs effects of renewable energy to support EVs or of Inflation Reduction Act EV tax credits because our figures for these were based on a back-of-the-envelope analysis rather than a full modeling analysis.
  3. The transportation sector was the second-largest source of greenhouse gas emissions in 2021 in Michigan, accounting for 28 percent of total emissions (Rhodium Group 2022). While the transportation sector accounts for emissions from sources beyond LDVs—such as medium- and heavy-duty vehicles, aviation, rail, and others—LDVs are the largest contributor in Michigan as well as in many other states. Michigan has a goal to reduce statewide emissions by 28 percent by 2025 and 52 percent by 2030, relative to 2005 levels, and to achieve economy-wide carbon neutrality by 2050.
  4. OFME has six objectives: increase mobility investment in Michigan; expand Michigan’s smart infrastructure; engage more mobility startups; further enable Michigan’s mobility workforce; accelerate vehicle adoption in Michigan; and bolster Michigan’s mobility manufacturing core (OOTG 2020).
  5. Since the creation of the SOAR Fund, Michigan has secured $7 billion in investment from GM and $2 billion from Ford to support EV manufacturing and $375 million from Hemlock Semiconductor Operations to improve the semiconductor supply chain (Pohl 2022).
  6. These incentives take the form of tax breaks or grants given by the government to companies to influence the latter’s decisions about business location, expansion, and even job retention.  
  7. Research from Mazerov and Leachman (2016) noted that states are better off producing more homegrown businesses and helping fast-growing startups already in their state rather than luring businesses from other states. Their analysis found that the vast majority of jobs are created by companies that are already present in a state and that startups are the fundamental drivers of job creation when the US economy is doing well.
  8. Bartik (2015) noted that incentives are more effective when they apply to the following: new investments and not to businesses that are already in the state; jobs that provide a high wage premium, which boosts multiplier effects and raises average state earnings per worker; and businesses that create jobs that go to state residents. Incentives can also be made more effective by aligning economic development policies with equity and inclusive growth goals (Germán and Parilla 2021).
  9. One analysis estimated that emerging mobility trends around autonomous vehicles (AVs) and electric cars could create an additional 115,000 jobs in the US automotive industry by 2028 (Mosquet et al. 2019). Of these, 30,000 jobs would be in computer engineering, 15,000 in traditional engineering, and 70,000 in skilled trades including mechanics for AVs and EVs. With less than 1 percent of college graduates with degrees in computer science, computer engineering, and software engineering entering the automotive industry, the analysis further estimated that the national demand for engineering graduates in the AV and EV industry could be six times greater than the available supply (Mosquet et al. 2019).
  10. This analysis was done by Boston Consulting Group as part of a presentation titled “Improving Michigan’s EV Competitiveness” from October 2021 and shared with WRI.
  11. Another study estimated that EV owners can save up to $1,000 annually on fuel costs compared with driving an equivalent gasoline car. They can also save up to $4,600 on maintenance and repair over the lifetime of the vehicle (assuming 200,000 miles) (Preston 2020).
  12. For a more detailed understanding of how EVs differ from ICE vehicles, please see Appendix A in UAW (2019) and Küpper et al. (2020).
  13. The Economic Policy Institute study modeled various scenarios to estimate jobs impacts. In a basic scenario in which BEVs reach a 50 percent national market share by 2030, 33,147 jobs are lost in auto assembly and 40,668 in auto parts. The study then layered on additional assumptions to this analysis. If the domestic production of components that make up the EV powertrain such as the battery pack and the electric motor increase to the same level as the domestic content of ICE powertrains, the job loss in auto parts is only 2,515 by 2030, while the job loss in auto assembly is unchanged. If in addition to that change, the share of US-made cars sold domestically increases by 10 percent, there are positive jobs impacts in both auto assembly (+3,184) and auto parts (+149,401). This study was conducted prior to the passing of the Inflation Reduction Act, which does aim to increase domestic content in EV production.
  14. The current policy scenario from Baldwin et al. (2021) assumes that EVs will comprise 45 percent of new LDV sales, 38 percent of MDV sales, and 12 percent of heavy-duty truck sales in 2035. The clean electricity share is 47 percent by 2035 in this scenario. This does not consider the impact of the passing of the Inflation Reduction Act.
  15. The Michigan Healthy Climate Plan has separate goals for vehicles sold and EV charging Infrastructure. Its goal for light-duty vehicle sales is 50 percent by 2030, which is closest to our Current Policy scenario discussed in Appendices C and D and amounts to about 1.2 million EVs on the road by 2030. However, the plan also has a goal of deploying charging infrastructure to support 2 million EVs by 2030, which is closest to our All Electric by 2033 scenario and the goal we sought to highlight here.
  16. An alternate option would be to compare the All Electric by 2033 scenario to a less ambitious EV penetration scenario instead of to a No Transition scenario, but we decided not to do this as it would be less insightful. Even a less ambitious EV penetration scenario entails profound changes to Michigan’s jobs, so we wanted to capture those effects in our results too. Comparing an All Electric by 2033 scenario to a No Transition scenario allows us to understand the total difference between the old way of producing vehicles and the new way, rather than just the difference between a high EV penetration scenario and a lower EV penetration scenario.
  17. The BEAN tool provided cost projections for only 2020, 2025, 2030, and 2045, so we estimated costs in the intervening years based on the trend. The market shares of compact cars, midsize cars, sport-utility vehicles, and light-duty trucks are held constant at 2020 levels over the full 2024–40 period. See Appendix C for more detail.
  18. Our modeling for electricity purchases considers the jobs effect of operation of electricity generation, transmission, and distribution but not new construction. Our modeling does not consider the effects of a shift to renewable energy in electricity generation, but we present indicative results of a related thought experiment on the topic.
  19. Our results for the rest of auto manufacturing except batteries encompass not only manufacturing but also the transport, wholesale, and retail dealership jobs that go along with manufacturing. The vast majority of the jobs effects will be in manufacturing itself. Our modeling applies a simple ratio to the changes in manufacturing expenditure to determine the effect on transport, wholesale, and retail dealerships based on the past economic relationship, and we do not add any specific assumptions about how the shift to EVs will change these jobs beyond changing costs.
  20. Throughout this section, we generally round numbers to the nearest thousand. The total may not be equivalent due to rounding. Exact numbers can be found in Appendix D.
  21. In input-output models such as the DEEPER model used for this report, a decrease in spending in a sector automatically translates to a decrease in jobs.
  22. Some gas stations, for instance, have installed Level 3 chargers in a bid to appeal to both EV drivers and those driving gas-powered cars. However, installing chargers at gas stations can be expensive for a small business, and gas stations will face intense competition from other public EV chargers (Heilweil 2022).
  23. The Sustainable Transportation Education Program provides middle and high school students training and curricula related to EVs, plug-in hybrid vehicles, alternative fuels, and the smart grid, among other things. The curricula are STEM-based and emphasize problem-solving, critical thinking, and inquiry-based learning. The program is funded by Duke Energy (NCSU n.d.).
  24. Forty-nine percent of Michigan residents had either a postsecondary degree or an industry credential in 2020, which is slightly lower than the national average of 52 percent (MISD n.d.). Since then, the number of students heading to college has been declining due to disruption caused by the pandemic (Steel 2022).
  25. The R&D tax credit is a dollar-for-dollar credit that can be claimed by companies to offset costs spent on research and development to benefit their businesses. Michigan currently does not have this, while many states offer it. House Bill 5601, which has not been enacted, provides a tax credit equal to 15 percent of qualified research expenditures incurred by businesses in Michigan (Sanchez 2022).
  26. Ninety-six of the top 100 automotive suppliers in North America have a presence in Michigan, with 60 of them headquartered in Michigan (MICHauto 2021).
  27. In August 2022, Ford and DTE Energy entered into an agreement for the utility to add 650 megawatts of new solar power through its MIGreenPower. This is the largest renewable energy purchase made from a utility (Pearl 2022).
  28. One study assessing the effectiveness of state-level financial incentives for BEV adoption found that there is an 8 percent increase in BEV registrations per thousand dollars of incentives offered. Considering the total value of incentives, there is an 11 percent increase in total BEV adoptions compared with a counterfactual scenario where there are no state-level incentives (Clinton and Steinberg 2019).
  29. At least 30 states have established some kind of fee, which range from $50 in South Dakota to $235 for EVs over 8,000 pounds in Michigan. Michigan charges an annual base fee of $100 for EV owners. In addition, it charges $5 more for every 1 cent increase in state gas tax (Igleheart 2022).
  30. AB 970 states that permitting for projects with less than 25 charging stations at a single site will be deemed complete if after five business days the city or county has either not found the application to be incomplete or issued a written deficiency notice. If the project has 26 or more charging stations at a single site, then the application will be deemed complete after 10 business days and will be deemed approved 40 business days after deemed complete (TrackBill 2021).
  31. A few Michigan localities such as Ann Arbor and East Lansing have passed zoning ordinances requiring EV readiness. However, a statewide EV readiness code could be more transformative. The installation of EV chargers in parking lots requires the construction of a conduit through concrete to connect the electric vehicle supply equipment with electrical connection. It is more cost effective to do this when a building is being built or undergoing a major renovation.
  32. For more information on New Jersey’s Model Statewide Municipal Electric Vehicle (EV) Ordinance, see NJDCA (2021). For more information on Oregon’s HB 2180, which amended the state building code to include charging stations for EVs, see OSL (2021).
  33. For more information, see CARB (2022).
  34. Both DTE Energy and Consumers Energy incentivize EV drivers to charge at home during off-peak hours. DTE Energy, for instance, offers three EV electric pricing options while Consumers Energy offers a “nighttime savers rate” (DTE Energy n.d.; Consumers Energy n.d.).
  35. Make-ready programs can vary in design. However, they typically require the utility to cover all or a portion of the cost of installing equipment and wiring on the utility side of the meter and sometimes on the customer side of the meter (Hernandez 2022). Utilities can recover the cost by adding the infrastructure to their rate base or using another recovery mechanism.
  36. The MassHire Rapid Response Team, for instance, is part of Massachusetts’ Department of Career Services. It helps employers and employees during layoffs across sectors by facilitating meetings between employers and staff, helping workers understand the rights and benefits afforded to them, and connecting workers with other career services as needed (COM n.d.).
  37. This recommendation is geared toward helping workers employed in large auto manufacturing facilities and facing the potential of mass job displacement. The diffuse nature of workers employed at gas stations and maintenance and repair shops—which are located across the state, are typically small businesses with fewer workers, and will face different timelines of closure—makes it more difficult to target this recommendation to help those workers.  
  38. Michigan had prevailing wages from 1965 until the legislature repealed them in 2018 after a statewide petition drive. Governor Whitmer reinstated them in October 2021, requiring that prevailing wages be paid for any construction project funded with state money (OOTG 2021a). In March 2023, Michigan enacted a law restoring a construction industry prevailing wage.
  39. There are concerns that a wage increase as a result of policies like prevailing wages could raise the cost of clean energy projects, slowing their development. However, evidence so far suggests that there are modest increases in cost, which are often offset by productivity improvements as higher wages lead to more efficient work (Mayfield and Jenkins 2021; Jones 2020).
  40. For instance, the manufacturing of internal combustion engines can serve as a comparable job for the manufacturing of battery cells. A recent analysis comparing the skills requirement for the two jobs found that “the skill requirements for manufacturing BEV powertrain components lie within the range of skill requirements for ICE vehicle powertrain components” (Cotterman 2022).
  41. In the past, some EV companies, like some employers in other industries, have used different tactics, sometimes illegally, to discourage unionization among employees. For example, the National Labor Relations Board upheld a ruling against Tesla for illegally firing an employee attempting to organize other workers (NLRB 2021), while the chief executive officer of Fuyao Glass was filmed discussing employees that had been fired for attempting to unionize as well (Schladen 2020). At a Nissan plant in Mississippi, the National Labor Relations Board also formally charged the company with 24 counts of lawbreaking, including banning the distribution of pro-union literature and interrogating employees about their intentions to vote for unionization (NLRB 2017).
  42. In December 2020, workers at the Ultium Cells battery plant in Lordstown, Ohio, voted to join the UAW by a margin of 710 to 16, the first successful union vote at a battery cell plant, of which there are currently relatively few in operation.
  43. Wage boards set multiple minimum pay standards by industry and occupation, which are arrived at via consultations with stakeholders. These can set wages above state or local minimum wages and can provide pay differentials for workers with additional skills. A handful of states, including Arizona, Colorado, California, New Jersey, and New York, have passed legislation that allows for creating wage boards, but they have been used infrequently. The most recent example is from New York where a wage board raised the minimum wage for fast food workers to $15 per hour (Wall and Madland 2021; Dube 2020).
  44. In 2016, Mitsubishi closed a facility in Illinois, though it has since been bought by Rivian and employs nearly 6,300 people, which is double the number of people employed by Mitsubishi at the same facility (Whalen 2022). Additionally, GM closed a facility in Lordstown, Ohio, in 2019 that employed about 1,500 people, despite having received millions of dollars in tax credits for opening and operating the facility through 2027 (Vanac 2021). Because of the closure, GM has agreed to invest millions in the local community and repay the money it received. In December 2022, Stellantis announced plans to “idle” a manufacturing facility in Belvidere, Illinois, in February 2023, which resulted in indefinite layoffs for over 1,300 employees. Importantly, temporary closures are a natural part of the auto industry due to factors such as shortages of parts or supply disruptions, though such events can have a significant impact on workers and communities (Mahoney 2022).
  45. As part of the Economic Recovery Act of 2020, New Jersey has created a seven-year, $14 billion package of tax incentives, financing, and grant programs. For projects that exceed $10 million in total project costs, project developers are required to enter into a CBA with the New Jersey Economic Development Authority, the county, and the municipality (NJEDA n.d.).
  46. Detroit’s Community Benefits Ordinance is triggered when a project is $75 million or more in value, receives $1 million or more in property tax abatement, or receives $1 million or more in a transfer of city-held land. The Planning and Development Department establishes a nine-member Neighborhood Advisory Council to work with the project developer to secure community benefits (COD n.d.). Critics of the ordinance have put forth several recommendations to strengthen it. Groups like Detroit People’s Platform and Equitable Detroit Coalition have recommended lowering the monetary threshold for projects, changing the composition of the Neighborhood Advisory Council, and making the agreements legally enforceable.
  47. In 2012, Senate Bill 535 established requirements for minimum funding levels to disadvantaged communities and gave the California Environmental Protection Agency (CalEPA) the responsibility for identifying those communities. In May 2022, CalEPA released its updated designation of disadvantaged communities, which is based on the latest iteration of CalEnviroScreen 4.0, the state’s environmental justice mapping tool (CEPA n.d.).
  48. The New Jersey Department of Environmental Protection (NJDEP) published draft rules for implementation of the state’s Environmental Justice Law in June 2022. The legislation defines an overburdened community as one in which at least 35 percent of the households qualify as low-income households; at least 40 percent of the residents identify as minority or as members of a state-recognized tribal community; or at least 40 percent of the households have limited English proficiency. To determine whether a project is in an overburdened community, NJDEP developed the Environmental Justice Mapping, Assessment, and Protection Tool (NJDOE n.d.).
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