U.S. Energy Secretary Jennifer Granholm returned to her former home state of Michigan on Thursday to tour one of the 11 automaker facilities that her department awarded a total of $1.7 billion in electric vehicle "conversion grants." The DOE grants are the latest part of the Biden administration's multi-billion-dollar effort to shift struggling U.S. facilities to EV production.
Granholm toured a General Motors facility in Lansing, Michigan, that won the largest of the grants, a $500 million award to convert its Lansing Grand River Assembly Plant to make EVs. Granholm spent more than a decade in Lansing as Michigan's governor and attorney general, and she said she had seen the state suffer as GM and Detroit's other automakers lost jobs to foreign competition.
"For so long we acted as if the best days of American manufacturing were behind us and that there was nothing we could do about it," Granholm said in a press briefing on Wednesday, previewing the grant announcements.
Other countries had vigorous government programs supporting their auto sectors, Granholm argued. Now the U.S. has one as well, she said, with President Joe Biden's approach that melds industrial strategy with climate policy to grow manufacturing jobs while cutting greenhouse gas emissions. "We're giving American manufacturing a chance to get off the sidelines and back in the competition," she said.
The Domestic Auto Manufacturing Conversion Grants program is a competitive process funded by the Inflation Reduction Act, or IRA, to help prevent the possible closure of auto facilities and instead shift them to electric production.
The grants announced Thursday support facilities in eight states making a range of electric, hybrid and hydrogen fuel cell cars, trucks, buses and even motorcycles. White House officials said the winning facilities are ones that were at risk of closure or cutbacks or, in some cases, had already been shuttered and will now reopen.
Global EV sales have grown rapidly but many traditional U.S. automakers have struggled to switch from internal combustion engine vehicles to electric, raising concerns that cheaper foreign-made EVs, especially from Chinese automakers, would dominate the new market.
"Funding the EV transition is compelling traditional automakers to invest vastly more each year than they did in a stable, internal combustion engine world, seriously challenging their profitability," economist Elaine Buckberg told Newsweek.
Buckberg is a senior fellow at the Salata Institute for Climate and Sustainability at Harvard University and was formerly chief economist of General Motors. "Being selected for one of these grants is a huge benefit for the winning company and community," Buckberg said.
Accelerating EV Investments
The grants are the latest move by the Biden administration to support domestic EV construction while clamping down on carbon pollution from gas-powered vehicles.
The administration's limits on tailpipe emissions from cars and trucks, announced in March, are the most stringent in history—yet they won support from several major automakers and trade groups. In May, Biden announced steep tariffs on Chinese EVs and batteries, and tax incentives in the IRA encourage sales of domestic EVs and corporate investment in EV construction and battery facilities in the U.S.
According to the White House, the private sector has invested $177 billion in EV and battery manufacturing nationwide since Biden took office. An analysis published in March by the nonprofit Environmental Defense Fund found that companies had invested $114 billion in EV and battery manufacturing just since the passage of the IRA, roughly three times what had been invested in the five years before Biden took office.
GM officials said in a statement that the company has announced over $12 billion in investments for EV manufacturing and supply chains since 2020.
"GM's investment and this Department of Energy grant underscore our commitment to U.S. leadership in manufacturing and innovation, making sure we're competitive at home and abroad," GM Vice President of North America Manufacturing and Labor Relations Camilo Ballesty said in a statement.
GM appears on both Newsweek's rankings of America's Most Responsible Companies and Most Trustworthy Companies in America. Three other grant recipients also appear on Newsweek rankings of responsible and trustworthy companies.
Iconic motorcycle maker Harley-Davidson, which appears in the top ten among the automotive sector in both of those Newsweek rankings, won $89 million from the DOE to expand its York, Pennsylvania, facility to make the LiveWire EV motorcycle.
Auto parts supplier Cummins, on the list of America's Most Responsible Companies, will use its $75 million grant to convert a facility in Columbus, Indiana, to make zero-emissions components and electric powertrain systems.
And Georgia-based Blue Bird, which appears on Newsweek's Most Trustworthy Companies in America ranking, won nearly $80 million to convert a facility to make zero-emission electric school buses and expand its workforce training.
Blue Bird has quietly become the country's best-performing EV company with stock prices more than doubling in the first half of this year, thanks in part to the Biden administration's EV push. In a recent profile interview with Newsweek, Blue Bird President Briton Smith said the company benefitted from about $200 million in additional revenue in 2022 because of government policy support.
"We've seen really an exponential growth in applications and number of school districts across the country," Smith told Newsweek in June, singling out the impact of the federal Clean School Bus program to help school districts switch from polluting diesel buses. "This additional funding has really helped increase the interest across the country," Smith said.
Other grant recipients include American Autoparts Inc., in Toledo, Ohio; two grants are going to Fiat-Chrysler for facilities in Belvidere, Illinois, and Kokomo, Indiana; Volvo for its heavy truck facilities in the U.S.; and Michigan-based autoparts maker ZF North America.
Supporting Union Jobs
Blue Bird stands out as the only grant recipient based in a southern state. Not coincidentally, Blue Bird is also among just a few southern automaking facilities with a unionized workforce. Blue Bird workers voted last year to join the United Steelworkers of America and the company finalized its first contract with the union this year.
All 11 facilities receiving grants are unionized and when previewing the grant awards for reporters, Biden administration officials made clear the importance of unions to a workforce.
"We will not let our transition to clean energy be a zero-sum game where workers get left behind," Acting Labor Secretary Julie Su said in the Wednesday press briefing. White House officials projected that the grants would help ensure 15,000 union jobs and spur creation of 2,900 new jobs.
Su said the grants are not "blank checks" and that companies will be held accountable for commitments to production and job retention and creation.
The DOE will negotiate terms for the funding including milestones for production schedules, the timeline for reactivating closed facilities in some cases, and targets for training and re-skilling workers.
The United Auto Workers, which endorsed President Biden's reelection campaign after he joined UAW workers on a picket line during their strike last fall, is a winner in the grants. At least five of the grants awarded create or retain UAW jobs.
"We've said all along that the money is there to make this a just transition, and not a race to the bottom," the UAW said in a statement emailed to Newsweek. "We're excited to be fighting alongside the Department of Energy to make sure that corporations that get federal funding honor their commitments to the workers who make the products."
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