A roadmap for Michigan’s electric vehicle future

An assessment of the employment effects and just transition needs

Introduction

Michigan has begun to position itself as a leader in the production and deployment of electric vehicles, building on its long-established strengths in automotive research, development, and manufacturing, promising state initiatives, and recent federal laws like the Inflation Reduction Act. Further action from the state can enable Michigan to lead the way and show how the transition to EVs can be done in an equitable manner while supporting high-quality jobs and economic development.

Unsplash/Gary Meulemans

The future of cars is increasingly electric. Passenger electric vehicle (EV) sales have increased threefold globally and fourfold in the United States over the last five years (BNEF 2022c). In 2022, sales of battery EVs and plug-in hybrid EVs accounted for 13 percent of the global market (Irle 2023), and 6 percent of the US market (Shahan 2023). Growth in sales has been particularly impressive in the last three years, even as the global pandemic disrupted supply chains and slowed down sales of conventional cars. The upward trajectory of EVs is likely to continue in the coming decades.

The shift to EVs is aided by multiple factors: rising concerns about the economic burden of climate change, volatile oil prices, an influx of private sector investments increasing the variety of EVs consumers can choose from, technological advances leading to improvements in battery range and a rapid decline in battery costs, the growing prevalence of EV charging stations, and an increasing number of government regulations and incentives. Investments and incentives included in the Infrastructure Investment and Jobs Act of 2021 (IIJA), the CHIPS and Science Act of 2022 (CHIPS Act), and the Inflation Reduction Act of 2022 (IRA) are expected to further propel EV adoption in the United States, as will tighter vehicle emissions standards proposed by the Environmental Protection Agency (EPA) this year.

Michigan stands to benefit tremendously from the EV transition. With the right policies in place, EVs can dramatically reduce the state’s greenhouse gas emissions3 and dependence on fossil fuels, improve public health by lowering air pollution, support environmental justice outcomes, and drive economic development and job creation.

Michigan’s historic leadership in the automotive industry gives it a significant advantage in manufacturing and deploying EVs. Michigan is home to 26 automotive original equipment manufacturers and 96 of the top 100 automotive suppliers, and accounts for 18 percent of US vehicle production (CFME 2021). Established auto companies like Ford and General Motors (GM), newer EV companies like Rivian, EV manufacturing suppliers, and infrastructure providers are pouring billions of dollars in investment in Michigan. The state is also aggressively leveraging its historic strength in automotive research, development, and design to position itself as a leader in EV innovation. Michigan’s public and private sectors are working together to increase the state’s share of EV manufacturing and the associated supplier base as well as the uptake of EVs among Michigan consumers.

With the governor’s office and the newly elected state legislature signaling their support, Michigan has an opportunity to adopt more ambitious and equitable transportation electrification policies.

For all the benefits and opportunities that Michigan can seize from developing and deploying EVs, the transition from internal combustion engine (ICE) vehicles to EVs is not without its challenges. The transition will be accompanied by changes in technology, production processes, and consumption patterns, which will make some parts of the automotive value chain obsolete while transforming others and introducing entirely new industry segments (Agrawal et al. 2022). All this will significantly impact the existing automotive workforce while raising questions around how to create high-quality and inclusive jobs in the growing EV industry. Furthermore, the shift from ICE vehicles to EV manufacturing could result in the closure of some legacy auto facilities that support the production of ICE vehicles, leading local communities to face losses in local tax revenues and cuts to public services (Cha et al. 2021b; Wang et al. 2022).

Against this backdrop, our analysis focused on answering two questions:

  • What are the new opportunities for quality job creation and economic growth for Michigan arising from the EV transition?
  • How can Michigan mitigate workforce- and community-level challenges to ensure an equitable EV transition that leaves no one behind?

Our analysis relied on a combination of economic modeling and stakeholder consultations to answer the above questions. The section “Approach: Understanding EV just transition needs” provides a brief overview of our methodology, and more granular details are included in Appendix C. The economic modeling sought to better understand how the EV transition will affect employment—job creation and job losses—in Michigan’s automotive value chain. World Resources Institute (WRI) contracted with John A. “Skip” Laitner of Economic and Human Dimensions Research Associates to model the employment impacts using the DEEPER (Dynamic Energy Efficiency Policy Evaluation Routine) Modeling System (ACEEE 2011). “Results: The employment effects of an all-electric future for Michigan” presents modeling results on how the EV transition will impact employment in key segments of the automotive value chain.

WRI created a nine-member civil society advisory council comprising Michigan-based environmental and environmental justice organizations and labor unions to inform the modeling analysis and help WRI develop policy recommendations for Michigan. In addition, WRI solicited input from dozens of stakeholders including representatives from Michigan state agencies, the private sector, academia, and community organizations on modeling assumptions, results, and policy recommendations. “Recommendations for Michigan policymakers: Seizing opportunities, addressing challenges” presents a tripartite framework of policy recommendations to drive an equitable EV transition in Michigan:

  • Innovation-oriented economic development policies that enable the state to attract both EV-related investments and talent
  • Equitable EV and charging infrastructure deployment policies to position Michigan as a leading EV adopter
  • Policies to create quality jobs and ensure that longtime autoworkers and communities are not left behind

We begin this report (“Context: Assessing Michigan’s current efforts to lead the EV transition”) by providing background information on what Michigan is already doing to move to an electrified transportation future and highlighting key areas where the state will need to do more.

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