The debate is over. The global automotive industry has committed to transitioning from internal combustion engine vehicles to electric vehicles. That raises a couple of questions. Where will the battery packs EVs need be made, now that the factories making IC engines are on their way out? And how can Michigan attract them?
“There’s this narrative that business is the problem when it comes to building a sustainable future. I think that is completely backward,” says Mike Alaimo, who serves as director of environmental and energy affairs for the Michigan Chamber of Commerce. “Innovative solutions and technologies are key in tackling the climate crisis, and we need businesses that are in a position to invest in those innovations and technologies in order to get there.”
Michigan has enjoyed some success. General Motors Co.’s Detroit/Hamtramck plant, once known as Poletown, has been transitioned into Factory Zero to assemble both EV batteries and electric pickups and SUVs. More than a thousand people will start manufacturing Chevrolet Silverado and GMC Sierra EVs in 2024 in Orion Township’s new $402 million facility. Lansing will see a $2.6 billion battery plant open toward the end of 2024.
But Michigan is very much in competition with other states. Ford Motor Co., for example, has committed to a $11.4 billion investment into two major electric facilities in Tennessee and Kentucky. GM is also investing billions in Kentucky, Ohio, and elsewhere. Hyundai Motor Co. is scheduled to begin building electric vehicles and batteries in Georgia in 2025, and Toyota Motor Corp. will start producing batteries in North Carolina the same year.
Key to these decisions are incentives. Whenever a conglomerate in any industry goes forward with an investment of hundreds of millions or billions of dollars in a given community, incentives from local and state governments — which can take the form of tax breaks, payment in lieu of taxes, or other arrangements — are always in play.
“It’s never a handout,” says Quentin Messer Jr., CEO of the Michigan Economic Development Corp. Companies, he says, have a “four-legged stool” of factors they consider when determining where to invest: talent, the right location, a business-friendly policy environment, and incentives.
Dundee, for instance, had been considered for a $2.5 billion battery plant adjacent to its existing Stellantis engine plant. But Stellantis ultimately opted to establish the facility in Indiana, partially because of the $180 million or so the company was offered in local tax incentives.
“The game that is played is to always imply that more is going to be necessary. Public-sector negotiators need to know the sector, be able to negotiate well, and call a bluff when it’s time,” says Andrew Guinn, an assistant professor of urban studies and planning at Wayne State University.
Joint ventures are also critical. General Motors is teaming up with LG to produce its Ultium EV batteries in order to share costs and resources, as well as integrate expertise from different industries. Ford has made a similar deal with SK Innovation, a South Korean energy company.
Michigan’s reputation for water and road issues can also play a big role in plant location.
It’s likely that funding for infrastructure and education will change substantially now that Gov. Gretchen Whitmer has won reelection — especially considering the added game changer of her Michigan Democratic Party winning full control of the state Legislature in November 2022 for the first time since the Reagan administration.
EV-related jobs also demand more education than previous generations of automotive work. Glenn Stevens Jr., vice president of automotive and mobility initiatives at the Detroit Regional Chamber, says the industry requires ever more technical skill, calling the modern EV “a computer on wheels.”
Strategies for securing that talent range from engaging high schoolers in vocational classes to establishing education and research pipelines like Ypsilanti’s American Center for Mobility campus and the University of Michigan’s MCity, which represents a collaboration between Ford, Toyota, and Honda, among others. Michigan is attempting, through its Sixty by 30 initiative, to raise the portion of the state’s workforce with some sort of postsecondary education to at least 60 percent by 2030.
“We’re a knowledge economy. Higher education is very important; so is investment in the skilled trades,” Stevens says. “That is going to be the differentiator for us.” But according to Stevens, it is not necessarily a question of how much money is spent, but one of how it is spent. The most valuable investment, in his opinion, would be to hire school counselors and create “career pathways” from the classroom to the workplace.
This story is from the February 2023 issue of Hour Detroit magazine. Read more in our digital edition.