Michigan decision makers need to move “expeditiously” to pursue programs and policies that will leverage and reaffirm the state’s role as a leader in the clean mobility industry amid uncertainty caused by tariffs, policy rollbacks, and foreign competition.
That is the overall takeaway from the new “Legacy, Innovation, and the Race Against China: The Automotive Industry and the Michigan Economy” report by the Lansing-based Institute for Energy Innovation and Michigan Energy Innovation Business Council (Michigan EIBC).
The report highlights the “critical” role the transportation sector and its supply chain partners play in the Michigan economy. As competition with China heats up, the report emphasizes the need for supportive policies that enable automotive innovation.
“Uncertainty is bad for business,” says Sophia Schuster, policy principal at Michigan EIBC. “Unsupportive economic policies, such as the threat of tariffs, will drive up prices and lead to declining sales and layoffs. This will stifle spending on research and innovation necessary to keep up in a market that has been blown wide open by a burgeoning Chinese auto industry.
“Failure to support American auto manufacturing today could be catastrophic for the American transportation sector of tomorrow, and no state will feel the impacts of this downturn more acutely than Michigan.”
Contributing nearly $348 billion annually to Michigan’s gross domestic product (GDP) and supporting more than 20 percent of the state’s workforce, the mobility sector is essential to the vitality of Michigan’s economy. Since 2016, $26.2 billion in announced investment in electric vehicle and battery manufacturing has been injected into the Michigan economy, leading to the creation of more than 25,000 jobs across the state.
It is projected that as EV adoption continues to increase and production ramps up, Michigan could see an increase of more than 50,000 jobs by 2030. Unpredictable federal policy actions, however, threaten to upend this promise and the future of an industry on which the Michigan economy has been built, Schuster says.
“To ensure that Michigan remains a hub for automotive innovation, rational and supportive federal and state policy action that embraces the transition to electrified transportation and encourages continued private investment is needed,” Schuster says.
According to the report, an estimated 30-42 million EVs could be on U.S. roads by 2030. Michigan stands to gain a lot by leading manufacturing in this transition. If implemented, however, sustained auto tariffs could increase the price of all new vehicles by thousands of dollars, potentially resulting in a sales decline of 1.8 million units across the U.S. and Canada.
“There is no denying that supportive federal and state policies made it possible for the American automakers to invest in Michigan,” says Glenn Stevens, executive director of MICHauto.
“From ramping up production, to securing their supply chains and integrating innovative technology solutions, these policy levers have been critical to them remaining competitive in a crowded global market. Rescinding these policies risks Michigan’s current status as a major locus of EV manufacturing and research and development, and the future of the American auto workforce.”
The advanced mobility sector contributes nearly $348 billion in gross economic output and over $14 billion to municipal, state, and federal taxes annually, the report states. Continued industry expansion could lead to the creation of 56,000 additional auto manufacturing jobs by 2030.
Declining sales resulting from economic uncertainty, however, could lead to mass layoffs and no state will feel the impacts of this downturn more acutely than Michigan. “Ceding auto leadership could be catastrophic to the Michigan economy,” the report states.
To view the full report, visit here. To view a fact sheet summarizing the report, visit here.
