Commentary: EV investments could steer the future of Michigan’s auto industry

Michigan Gov. Gretchen Whitmer’s decision to create a new Michigan Office of Future Mobility and Electrification in her administration comes at a time when it is becoming increasingly clear that electric vehicles are the future of the automotive industry.

General Motors committed to a $2.2 billion plan to manufacture all-electric vehicles at the Detroit-Hamtramck Assembly plant. Bloomberg New Energy Finance projects that global EV sales will grow from 2 million in 2018 to 10 million by 2025, 18 million by 2030 and 56 million by 2040. Michigan has the potential to be the center of a 21st century automotive industry powered by electricity, just as it dominated the automotive industry of the 20th century.

The new Office of Future Mobility also arrives at a time when a pool of funds to drive further investment in vehicle electrification is already available. Gov. Whitmer should seize this opportunity.

As a result of the U.S. federal government’s settlement with Volkswagen over the emissions cheating scandal, state governments received allocations of funding to cut emissions from diesel vehicles like trucks and buses.

Michigan’s share was $65 million when it was allocated in 2018. That is not a massive sum, but, if leveraged correctly, these funds can help provide foundational investments in charging infrastructure and create demand for certain classes of EVs.

Compared to vehicles that run on traditional internal combustion engines, EVs produce dramatically lower emissions and are much more suitable platforms — for a variety of technical reasons — for advanced mobility technology like automated and connected vehicles.

As electricity becomes the dominant energy source for transportation, fuel-burning vehicles will be slowly outmoded — the transportation equivalent to VHS cassettes. The VW settlement funds should be invested in the future of the industry, not the past.

In October 2018, the state released a plan, later updated in August 2019, that outlined how these funds will be allocated. The plan makes some significant investments into EVs, such as allocating 15% of the funds to EV charging infrastructure, the maximum amount allowed by the settlement.

But the plan leaves significant opportunities for new diesel vehicles to receive funds, while missing the bigger picture. For example, 30% is allocated toward replacing local freight vehicles, shuttle buses, and transit buses with new diesel, alternative fuel, or all-electric vehicles.

In a recently released report, the Institute for Energy Innovation, a research nonprofit affiliated with the Michigan Energy Innovation Business Council, makes several recommendations on how to improve the plan so more funds go toward EVs. For example, when replacing vehicles, the state should prioritize classes of vehicles where EV models are already available. The state should also reevaluate the plan annually to ensure that the latest models and technological innovations are taken into account.

If Michigan does not seize this opportunity, other states will be ahead in EV charging infrastructure and EV adoption rates. Colorado and Washington state are just two examples of places where the governors recently took steps to prioritize EVs when spending settlement funds.

Even a small investment can kick off feedback loops that lead to exponential growth. As more EVs hit the road, there is more demand for charging infrastructure, which in turn encourages more EV ownership by reducing the anxiety around being able to find a charging station when you need one. Having more electric buses transporting students to school and providing public transit will help educate Michiganders as we transition to an electrified future.

The world is moving toward an automated, shared, and connected mobility future on an electrified platform. Using the VW settlement funds for EVs can, to quote from Gov. Whitmer’s recent State of the State address, help secure Michigan’s “pole position in mobility innovation” for decades to come.