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Trump Orders Cast Shadow Over EVs, Michigan Energy Transition

January 29, 2025

MLive
Jan. 27, 2025

Industries don’t like uncertainty, but there’s a lot of that going around following President Donald Trump’s efforts to shift the federal government’s energy and environmental policies into reverse through executive action on his first day in office.

On Monday, Jan. 20, Trump signed multiple executive orders that, together, halt permitting for renewable energy projects and pause payment on grants under the Inflation Reduction Act (IRA) and the federal bipartisan infrastructure law, which put billions toward climate and clean energy programs and transportation infrastructure like electric vehicle charging stations.

The effect of a wholesale energy policy shift could be large in Michigan, which won billions in federal subsidies under the IRA and is facing a 2040 state-mandated deadline to source all of its energy from clean sources such as wind, solar and nuclear.

The state’s economy is also closely tied to the Detroit auto manufacturers, which have relied on loans, tax rebates and other incentives to speed their transition toward EVs without losing global market share to competitors in Europe and China.

Policy experts worry that Trump’s freeze on Biden climate subsidies and order to boost of domestic fossil fuel production could dampen Michigan’s economy as the global market inexorably transitions to clean energy and electric vehicles.

“I’m worried that if the U.S. auto industry isn’t able to be on the leading edge on electric vehicles, that we’re going to lose our place in the global auto industry,” said Doug Jester, managing partner at the 5 Lakes Energy consulting firm.

“That would be bad for Michigan.”

The Trump day one spending freeze included funds for EV charging stations, which Gov. Gretchen Whitmer’s administration hoped to expand to 100,000 across the state by 2030 using federal infrastructure law funding to help push drivers toward EVs.

But Trump promised to revoke the “EV mandate” this week — a shorthand term for a non-binding Biden goal to have EVs make up half of domestic new car sales by 2030. He also signaled plans to cancel the $7,500 tax credit for drivers who buy new EVs and revoke a waiver that allows the state of California to ban sales of gas-only cars by 2035, which twelve other states are following.

Jester said incentives for charging infrastructure and consumer purchase advance EV adoption and help “create a reliable market for the U.S. auto industry to ramp up their ability to sell electric vehicles.” But the market for EVs is larger than just the U.S.

“There are lots of other programs, manufacturer tax rebates and things like that, that were intended to help the auto industry make the transition without losing market share and money in their global competition,” Jester said.

Detroit automakers have invested billions in recent years to catch-up with competitors like Tesla and overseas manufacturers. In Europe and China, half of all new vehicle sales are expected to be EVs by 2030 — although adoption in the U.S. has been slower. Ford, GM and Stellantis have extended timelines for going fully electric over projections two years ago.

Changed market projections have led to cancellation of some EV models and delays and scale-backs in production and plant development, say trade groups.

Glenn Stevens, director of MichAuto, an affiliate of the Detroit Regional Chamber, said the charging infrastructure isn’t built out enough to overcome “range anxiety” for many and the cost of EVs is still higher than comparable gasoline or hybrid vehicles.

“That absolutely affects the market,” Stevens said.

Stevens said that EVs will continue to grow in domestic and global market share regardless of Trump’s actions, but characterized the political rhetoric around EVs as a negative influence.

Stevens said the Trump direction on EVs and fossil fuels isn’t surprising, but there is unspent money from the IRA and CHIPS Act, which aids semiconductor manufacturing. Whether those funds are safe from clawback isn’t known.

“This industry does not do well with uncertainty,” Stevens said. “It’s a very capital-intensive industry. It’s very long lead time industry from a manufacturing and product development standpoint. It’s a very complex supply chain that you cannot change overnight.”

“Anything that affects the supply chain or the ability to plan future products really is something that creates problems for the industry,” Stevens said.

“We have some uncertainty right now.”

At the state government level, agencies and Gov. Gretchen Whitmer’s office say they’re reviewing Trump’s orders to see how various programs are affected but have otherwise released very little detail on what money is safe from clawbacks.

In Michigan, companies have announced nearly $28 billion in clean energy investments across 74 projects — the most of any state — since the IRA was signed into law in 2022.

Since then, the Biden administration has disbursed $129 million to accelerate wind and solar rollouts, made hundreds of millions available for household efficiency upgrades and juiced updates to a GM plant for EV production to the tune of $500 million.

Trump’s “Terminating the Green New Deal” order gives federal agencies 90 days to report to the Office of Management and Budget how disbursements under the IRA and infrastructure laws align with the administration’s energy policy goals.

Most of Trump’s executive actions are expected to be litigated by opponents and their true impact will be unclear for a while. Trade groups in Michigan say they’re still trying to figure out the status of various grant-funded clean energy projects.

Much of the grant money is already legally committed. Biden officials told reporters before the inauguration that it had protected through contract obligation about 84%, or $96.7 billion, of the IRA’s clean energy grants from potential clawback.

Laura Sherman, president of the Michigan Energy Innovation Business Council (MEIBC) trade association, thinks the safety of IRA project funds will largely depend on the agency they are disbursed through and the stage of project deployment.

Sherman said Trump can’t simply reverse the overall market trajectory away from fossil fuels toward clean energy because ratepayers, regulators and utilities ultimately gravitate toward whatever form of energy is the cheapest to meet demand.

“The bigger picture is that renewable energy is the cheapest form of new energy,” Sherman said. “You can’t change economics and the market with an executive order. Despite the president and the new administration’s desire to reopen coal mines and coal-fired power plants, the economics just aren’t there.”

Michigan officials are also unlikely to pull a U-turn on its push to slash planet-warming greenhouse gas emissions. Michigan’s clean energy transition strategy is largely focused on reducing emissions from power generation through utility regulations, said Jester. Big utilities, like DTE Energy and Consumers Energy, have already made plans to ramp up renewables to comply with new targets Democrats passed in 2023.

But those plans also rely on federal subsides that are in doubt. Consumers and DTE received more than $14 billion in conditional loan guarantees from the Biden administration to provide lower cost financing for renewable projects.

If Trump can successfully withhold those funds, “it doesn’t mean that DTE and Consumers won’t meet the renewable energy standards, but it could mean their rates to customers are a little bit higher than they otherwise would have been,” Jester said.

While U.S. energy demand is increasing thanks to the needs of AI and data centers, Jester and Sherman said they could nonetheless find no market reasoning for Trump’s plan to increase oil and gas production by declaring a “national energy emergency.” The U.S. now exports fossil fuels, producing more oil and gas than any other country in the world.

American oil and gas production “already meets the market demand,” Jester said. “Any additional production in the U.S. gets dissolved into the international market.”

“It won’t have much of a price effect,” he said. “We’ll just exploit our resources faster and sell them off.”

Jonathan Overpeck, a climate scientist at the University of Michigan, said there’s no real economic benefit to boosting oil and gas production “except to the fossil fuel industry and a few states that really rely on the fossil fuel industry for their revenue.”

“The irony here is that by hurting our market share, by hurting our industries and renewable energy, battery storage, EVs and the like, we’re giving China a big advantage,” Overpeck said. “We’re basically saying to them, we’re going to take four years off of our competition, let you guys get a bigger lead while the oil industry does really well in the United States.”