The shift to electric vehicles (EVs) is the biggest revolution in the auto industry in a century. Michigan, as the United States’ leading auto manufacturer and one of the biggest auto producers globally, has the opportunity to be at the vanguard.
While some are concerned that a shift to EV manufacturing could threaten jobs in Michigan and other auto-producing hubs, WRI research shows that the opposite could be true: With an effective transition plan in place, the shift from gas-powered to electric vehicles can grow and revitalize the auto industry.
If Michigan fully embraces EVs, it could create 56,000 additional auto manufacturing jobs by 2030 (compared to what it would have if no transition took place) and boost whole new industries like EV charging infrastructure.
In addition, Michigan EV owners could save $40 billion cumulatively by 2040 from lower vehicle purchasing, fuel and maintenance costs. The state could also see significant health benefits from reduced air pollution and could slash its greenhouse gas emissions.
These gains are not a foregone conclusion: Michigan must make the right investments in manufacturing and infrastructure, and properly prepare autoworkers and communities so that everyone benefits. But done right, Michigan can set an example for other auto-producing states and regions as they begin to shift gears.
EV Rollout Is Accelerating in the United States and in Michigan
U.S. electric vehicles sales are poised to grow rapidly thanks to falling prices and incentives which lower the cost to purchase and produce EVs. The Environmental Protection Agency (EPA) has proposed new tailpipe pollution regulations which, if adopted, could help EVs reach two-thirds of passenger vehicle sales by 2032. And momentum is increasing in the private sector; for example, Walmart recently announced that it will roll out thousands of EV chargers at its stores nationwide.
These advances suggest that a rapid transition isn’t so far out of reach. The U.S. was at 6% passenger EV sales in 2022; Norway, for comparison, went from 6% EV sales to 86% in just 9 years after implementing a suite of policies to lower consumer EV costs and build out public charging infrastructure.
In line with the times, Michigan’s “Big Three” automakers — Ford, GM and Stellantis (Chrysler’s parent company) — have all announced ambitious EV rollout plans in recent years. They are offering an ever-increasing number of EV models to appeal to a wider range of drivers, from the Chevy Equinox ($22,500-$41,500 after federal tax credits) to the Ford F-150 Lightning ($32,500-$83,500 after tax incentives).
Michigan has also begun positioning itself as a hub for EV assembly, battery manufacturing and semiconductor production. Manufacturers have made more than $16 billion in electric vehicle and battery investments in Michigan to date, which is tied with Tennessee as the most of any state.
Transitioning to EVs Can Boost Employment in Michigan’s Auto Manufacturing Sector
One of the most pressing questions regarding the United States’ EV transition — and Michigan’s auto industry in particular — is how it will affect manufacturing employment.
On one hand, electric vehicles have fewer moving parts than gas-powered vehicles, which could potentially mean fewer jobs in parts manufacturing and assembly. On the other hand, new jobs will be needed to manufacture EV batteries in addition to assembling vehicles. What’s more, the Inflation Reduction Act’s EV tax credits support job creation by incentivizing automakers to locate vehicle assembly and battery production in the United States. This has already led to announcements of plants and jobs moving onshore, including in Michigan.
Whether or not these effects lead to net employment growth in Michigan’s auto manufacturing sector depends on what actions the state takes in the near term.
A new WRI report finds that if Michigan enacts supportive policies and increases its market share of EV assembly and battery production, the state could add 56,000 jobs in auto manufacturing by 2030 compared to what it would have if the EV transition didn’t take place. This includes 17,000 direct jobs in auto manufacturing, 12,000 indirect jobs in the supply chain, and 27,000 induced jobs that could be created when direct and indirect autoworkers spend their earnings in the wider economy. The majority of these new jobs would stem from increased battery manufacturing.
However, this level of job creation is not guaranteed. If Michigan fails to seize the opportunities presented by the EV transition, it could lose market share of vehicle assembly and battery production as the industry moves to other places more supportive of electric vehicles. In this scenario, Michigan could see 47,000 fewer jobs from auto manufacturing in 2030 compared to what it would have if the EV transition didn’t take place. This includes 4,000 fewer direct jobs in auto manufacturing, 15,000 fewer indirect jobs in the supply chain, and 28,000 fewer induced jobs in the wider economy.
Achieving the best-case scenario will require both the public and private sectors to implement supportive policies and take advantage of incentives and opportunities in the emerging EV industry.
How EV Adoption Could Impact Michigan’s Economy
In addition to auto manufacturing, the way electric vehicles are charged, operated and maintained will have important impacts on Michigan’s economy. These effects will be more pronounced in the longer term as the passenger vehicle fleet turns over from gas-powered to electric vehicles.
With 100% electric vehicle sales, the installation and maintenance of EV chargers could contribute 7,500 new jobs in Michigan by 2040, including opportunities for electricians, construction workers and engineers. Increased electricity use to power EVs could support an additional 12,000 jobs in electric utilities over the same time frame. Expanded renewable energy deployment, which will be needed to power electric transportation with a cleaner grid, could also be an important job creator for Michigan.
Financial savings from EVs can lead to further economic benefits. Electric vehicles are already cheaper to operate and maintain than gas-powered vehicles; as costs fall, they are expected to be cheaper to purchase within a few years. Based on our analysis, Michigan EV owners could save $40 billion cumulatively by 2040 on vehicle purchases, maintenance and gasoline. When these savings are spent on other, more labor-intensive purchases like retail, hospitality or entertainment, it could lead to more than 25,000 additional jobs in Michigan’s economy. If the state’s EV owners take full advantage of federal EV and battery tax credits, they could save an additional $9 billion or more cumulatively by 2032.
However, there will be job losses in some parts of the economy related to car ownership, requiring careful transition planning from Michigan’s government to lessen the economic and social impacts.
A decline in gasoline use would lead to 46,000 fewer direct, indirect and induced jobs in 2040 if gas stations are not repurposed as EV charging stations. These are mostly convenience store jobs with below-average wages that are likely to become automated regardless of vehicle electrification. In addition, auto mechanics will require re-training to build the electrical and digital skills needed to maintain and repair electric vehicles. Even then, because EVs break down less often and need less upkeep than gas-powered vehicles, there could be 26,000 fewer direct, indirect and induced jobs related to maintenance and repair by 2040.
The transition can offer a chance for these workers to re-skill, upskill or shift to jobs of equal or greater quality — whether in EVs, clean energy or any other sector of the economy — if Michigan implements appropriate workforce transition policies.
Climate, Health and Equity Benefits of the EV Transition
Transportation is responsible for roughly one-third of Michigan’s greenhouse gas emissions, which means shifting to electric vehicles is essential to reducing the state’s climate impacts. Electrification of transport is one of the primary strategies in Michigan’s Healthy Climate Plan which, if fully implemented, could reduce the state’s greenhouse gas emissions by more than 50% by 2030.
Michigan’s Healthy Climate Plan also commits to ensuring that 40% of climate-related infrastructure investments (such as EV chargers) benefit disadvantaged communities. This policy is in line with the federal Justice40 initiative, which aim to direct 40% of the benefits from green investments to disadvantaged communities which are marginalized, underserved and overburdened by pollution.
Shifting to EVs will also reduce dangerous air pollutants from internal combustion engine (ICE) vehicles, such as sulfur dioxide, nitrogen oxides, particulate matter and volatile organic compounds. These pollutants can cause life-threatening breathing problems and lung diseases and are often particularly prevalent in low-income communities. Through a shift to zero-emission transportation, Michigan could avoid approximately 4,700 pollution-related deaths, 97,400 asthma attacks and 466,000 lost workdays by 2050.
How to Ensure the EV Industry Delivers for People, Climate and the Economy
Successfully navigating the transition to electric vehicles will require careful planning. To maximize the economic opportunities and avoid the risks to workers and communities, Michigan should focus on the following four priorities. While these suggestions are tailored for Michigan, the same principles will apply to other auto-producing states undergoing similar transitions.
1. Strengthen the innovation, workforce and infrastructure ecosystems
Leading in the EV industry means contending for more than just manufacturing jobs. Michigan must also attract corporate headquarters, research and development (R&D) facilities, and talented workers to support the digital and knowledge-based jobs of the EV industry. One way to do this is by offering tax credits that incentivize cutting-edge research within the state. Business R&D tax credits are offered by several other states and can be an effective strategy to increase entrepreneurial activity and new business formation.
In addition, Michigan should increase public investments in higher education and other programs to attract and retain students in the science, technology, engineering and mathematics (STEM) fields. Michigan is home to multiple highly ranked colleges, but it lags behind other states in producing graduates with STEM degrees. To help align education and training with new workforce needs — and to boost the number of EV-related educational offerings — the state has established an Electric Vehicle Jobs Academy and a Mobility Talent Action Team, and has provided support to build an Electric Vehicle Center at the University of Michigan. These platforms lay a foundation to develop the workforce pipeline for high-skilled jobs in R&D as well as blue-collar and technical positions related to EVs.
State government, businesses and educational institutions should also support and expand apprenticeships and pre-apprenticeship programs. These have proven highly effective at placing workers in new, well-paid careers and can help prepare the EV workforce. Apprenticeships can also provide better career opportunities for underrepresented populations with limited financial means, as workers are able to earn and learn at the same time.
Finally, bringing in new businesses and workers will require infrastructure upgrades such as grid modernization, renewable energy deployment and public transit improvements. Companies want to site their factories and headquarters in places with reliable power and are increasingly prioritizing access to clean energy. To this end, Michigan’s state government should pass the 100% clean energy bill proposed by lawmakers in April. Investments in public transit and other public infrastructure, such as the ongoing work to revitalize Detroit’s riverfront, can improve access to jobs and attract workers who want to live in vibrant cities and towns.
2. Improve job quality in the growing EV industry
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 workers without four-year college degrees. However, in recent decades U.S. autoworkers have seen an erosion in wages and working conditions as more jobs have become temporary and non-unionized. If nothing is done, the EV transition could continue this downward trend in job quality. Most EV battery plants so far have been non-unionized, though the recent unionization vote at a GM battery plant in Ohio by the United Autoworkers signals a potential shift.
Michigan’s government and automakers must ensure that EV jobs provide a sustainable livelihood. The legislature recently repealed a union-restricting law, which is a good start in promoting collective bargaining and unionization. It could also strengthen prevailing wages, which require government-supported employers to pay the basic hourly rate of wages and benefits earned by similarly employed workers in a given region. Michigan recently re-instated prevailing wages for state-supported construction jobs, which would apply to electricians and construction workers installing EV chargers; it should also consider extending them to manufacturing jobs.
In addition, Michigan can create clear, time-bound pathways for temporary workers to transition to comparable permanent roles and disincentivize the use of temporary worker contracts. Temporary workers make up an estimated 20% of employees in the auto industry; they often do the same job as salaried, permanent workers but earn less and lack protection, workplace safety and training. This could be addressed through new legislation (similar to the state’s prevailing wage requirements) or though manufacturing incentive packages created by the state. Such measures would uphold high job standards in the auto industry as it electrifies.
3. Make sure no longtime autoworkers or auto manufacturing communities are left behind
While the EV transition can create new jobs and economic opportunities, these effects will not be evenly spread. There will be employment shifts from one part of the industry to another — for example, from ICE vehicle parts manufacturing to battery manufacturing — as well as from one location to another. The state’s government and employers must proactively recognize and respond to the needs of workers and communities impacted by these shifts.
Michigan should create a transition support fund and rapid response team to help longtime autoworkers experiencing layoffs at a particular location. The state should also support retraining efforts to help workers build the skills needed for EV-related roles and for opportunities outside the auto industry. For guidance, Michigan can look to other states which have passed large-scale just transition initiatives. One example is Colorado’s new legislation which allocates funds to community economic development and worker assistance programs throughout coal communities in the state.
Companies, for their part, should provide early warning of any potential plant closures, giving the state, workers and communities adequate time to prepare. Given that one-quarter of Michigan’s auto parts manufacturing workers are over 55 years of age, it may make sense for the state to work with employers to provide fair early retirement packages for older ICE workers in situations where retraining or relocation is not feasible.
When an auto production plant is shut down and production moves elsewhere, an entire community can lose its economic foundation and valuable tax revenue. Michigan should provide transition support to any impacted communities. This can include funding for local capacity building, establishing alternative economic development strategies to attract new employers, or providing temporary revenue replacement for the lost tax base. In addition, siting new facilities strategically so they don’t add to cumulative pollution burden, and implementing well-designed, enforceable community benefits agreements to ensure benefits are equitably shared, are key to protecting local communities and minimizing negative impacts.
4. Encourage widespread, equitable EV uptake
Michigan currently ranks 33rd of 50 states in electric vehicle purchases per capita. Its network of charging stations has also been growing slowly: As of January 2023, only 16% of Michigan residents lived within a 10-minute round-trip drive of a fast EV charging station, while more than 87% lived within 10 minutes of a gas station. The shortage of charging infrastructure can be a serious roadblock to widespread electric vehicle adoption.
To increase EV uptake, the Michigan government has established an Office of Future Mobility and Electrification and an ambitious goal to support two million EVs on the state’s roads by 2030. There have been some exciting developments in this direction, such as the Charge Up Michigan Program to build direct-current fast-charging stations, and the Lake Michigan EV Circuit Tour, which aims to build a network of charging stations around Lake Michigan. Governor Gretchen Whitmer’s proposed budget for next year also includes significant investments in the EV ecosystem, including expanding the state’s charging infrastructure, supporting local governments in transitioning their vehicle fleets to EVs, and providing grants to school districts to switch to electric buses. With this support, Michigan has an opportunity to adopt more ambitious and equitable EV policies, leading as both a producer and a consumer.
Michigan should provide financial incentives such as tax credits and point-of-sale rebates for EVs and set stringent clean fuel and vehicle emissions standards, building on federal policies. While tax incentives play an important role in helping spur EV adoption, direct rebates have been found to be more effective in getting drivers to switch to EVs. Governor Whitmer has proposed removing the sales tax for electric vehicles, which would be a promising step.
In addition, Michigan should consider how to support electric vehicle uptake in historically disadvantaged communities with lower rates of EV ownership. To date, high-income and white households are the most likely to purchase electric vehicles — meaning they are also more likely to experience the associated health and financial benefits. Barriers to EV adoption may include high upfront costs, lack of knowledge about the benefits and availability of EVs, and lack of access to charging infrastructure in apartment buildings or rural areas.
Targeting educational outreach and financial incentives to low- and middle-income consumers is essential to more equitable EV adoption. Similarly, deploying charging infrastructure to rural and disadvantaged communities, standardizing permitting of charging stations and adopting EV-ready building codes can improve access to charging infrastructure and pave the way for EV uptake across the state. The government should make equitable transportation electrification part of the core mission of Michigan’s utilities along with affordable and reliable service.
Michigan can leverage federal funding opportunities from the Bipartisan Infrastructure Law and the Inflation Reduction Act to further these initiatives and enhance its EV leadership and competitiveness.
Creating a Roadmap for Nationwide Vehicle Electrification
The shift to electric vehicles is not a zero-sum game in which Michigan’s gain is another state’s loss. Reaching 100% of car sales being EVs within a decade will require not just Michigan but many other states to step up manufacturing of vehicles, batteries and chargers. And it will require everyone to lean in on EV adoption.
While WRI’s analysis focused on passenger EVs, there will also be an expansion in electric school buses, electric transit buses and electric freight trucks, which will depend on additional manufacturing and supportive infrastructure. The pie will only grow in the coming years.
Michigan should take a leading role and show how the electric vehicle transition can be done in an equitable, forward-looking way. With the right planning, the EV transition stands to benefit America’s economy as well as the environment — supporting jobs and economic development, helping car owners save money, and mitigating the risks of air pollution and climate change.
For more information, read WRI’s report: A Roadmap for Michigan’s Electric Vehicle Future: An Assessment of the Employment Effects and Just Transition Needs
