Michigan boosts funding to attract new EV-related factories

• Michigan is hoping to attract more projects that rely on federal funding for EVs and other high-tech manufacturing
• A new $125 million ‘challenge grant’ fund is a start toward the effort
• At the same time, two Michigan companies will expand using federal loans that back clean-energy shifts in auto manufacturing

Michigan’s latest step to increase its advanced-manufacturing footprint is coming in the form of $125 million in matching grants that will be awarded to companies seeking federal funding for clean energy and infrastructure projects. 

The new Battery and Advanced Manufacturing Challenge offers grants to Michigan companies who are applying for federal funding. That move allows the company to say it has state support — which, in turn, could make the company more likely to get the federal award to start new production in industries like electronic chips or EV batteries.

The program should help Michigan continue to add high-tech production as it braces for auto suppliers and manufacturers to slow production of traditional gas-fueled vehicles, Lt. Gov. Garlin Gilchrist said on Thursday

With the looming EV shift, additional funding will help Michigan companies “build excellence in the next generation of manufacturing … from large-scale to precision production,” Gilchrist said.

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With the new funding option, Michigan will try to attract companies that are awarded federal dollars from the Inflation Reduction Act, the CHIPS Act, and the Bipartisan Infrastructure Law, officials said. All three federal programs are funding the Biden Administration’s push to manufacture more EVs and their components in the U.S.

“This is an invitation for innovators and for companies from the state of Michigan to put skin in the game for your success,” Gilchrist said.

Gilchrist discussed the state’s plan on Thursday as a group of investors, auto industry advocates and state officials convened in Detroit for the Resilient Michigan Investment Strategy Summit. The program, organized  by the nonprofit Milken Institute, focused on how to modernize the manufacturing in the state, line up sites for new initiatives and outline investment-ready projects. 

Among the participants was the United States Department of Energy’s Loan Programs Office, which also on Thursday announced a combined $710 million in conditional loan commitments to two Michigan companies that plan to expand their clean energy manufacturing.

The awards, both made through the Advanced Technology Vehicles Manufacturing program, include:

• $544 million for SK Siltron CSS, which plans to expand production of high-quality silicon carbide (SiC) wafers for electric vehicle power electronics at its Bay City factory. The expansion is expected to result in 200 new jobs. The company has received $4.5 million in a tax waiver for an earlier expansion in Bay City, and it also received a $1.5 million state grant for its plans to hire 150 people there.
• $165.9 million for American Battery Solutions, which plans to add 460 workers to its battery pack assembly center in Lake Orion, where clients include last-mile delivery vehicle fleets and an RV manufacturer. In late 2023, the company announced it would be acquired by Japan-based Komatsu. 

The loans illustrate why gap funding is needed for rapid increases in EV and other U.S.-based advanced manufacturing, Jigar Shah, director of the DOE's Loan Programs Office, told Bridge on Thursday.

“A lot of commercial banks just find it to be too risky,” Shah said, describing how new technology doesn’t provide a company with years worth of operations and sales data to underwrite a loan.

Loan applications through the DOE show “a lot of interest” in Michigan-based activities, Shah added. “Almost all … manufacturing related.”

Activity isn’t abating, Shah said, despite the EV sales slowdown that has prompted auto manufacturers to dial back their production pace of fully electric vehicles. 

EV sales grew in 2023 by a record 1.2 million, reaching 7.6 percent of all new vehicle sales in the U.S., according to Cox Automotive.  But that number is lower than expected. The number is 18 percent less than forecast by Atlas Policy in a 2023 report. Now, experts say the industry is unlikely to reach the 6.9 million vehicle sales once expected by 2025.

U.S. policy that supports domestic sourcing of EV battery components is driving much of today’s factory-siting activity, Shah said. And Michigan’s strength while competing for that business is its already-developed industrial areas that offer utility, rail and highway proximity without long-term construction.

California and Texas lead the country in clean energy jobs, according to the 2023 Clean Jobs America Report, with Michigan one of seven other states with over 100,000 jobs.

The state added 5,400 clean energy workers in 2022, bringing its total to 123,983. About half are employed in manufacturing, the report said. 

Meanwhile, Michigan’s Battery and Advanced Manufacturing Challenge is funded from the $337 million allocated in the 2024 budget toward a Make it in Michigan Competitive Fund. 

Criteria for the challenge grants include how well the business will fulfill goals to bring climate-related investments to disadvantaged communities and how the jobs will benefit workers, including through wages and benefits.

Applications opened on Thursday and end March 14, according to the Michigan Infrastructure Office. A second round is open until May 1.