Déjà vu: Michigan going all-in on taxpayer-subsidized battery plants

State battery subsidies have been an enormous bust so far

Michigan’s Democratic governor announces that the state is set to become “a center for advanced battery production,” with the industry a key part of a “new Michigan economy.” Thousands of new jobs will be fueled by hundreds of millions and even billion in taxpayer subsidies.

The above could certainly apply to Michigan Gov. Gretchen Whitmer, who has made very similar predictions over the past few years. But they came from former Gov. Jennifer Granholm, more than a decade ago.

What happened to Granholm’s grand plan? It was a massive failure. Despite its deep state subsidies, Michigan’s battery ventures have been a bust.

In 2008 and 2009, the Michigan Economic Development Corporation authorized hundreds of millions in credits for battery cell manufacturing. In a report to legislators, the Michigan Strategic Fund noted that it had approved funding for five companies: A123 Subsystems, Dow Kokam, fortu PowerCell, LG Chem and Johnson Controls-Saft. These subsidies helped land investments and short-term jobs, but at a massive cost. Within a few years, the deals were a bust.

These companies received a total of $1.4 billion in state and federal subsidies, with predictions they would create more than 6,800 jobs. By 2014, the companies had fewer than 600 jobs. Today, these companies have mostly either gone through bankruptcy or gotten out of the battery business.

This hasn’t deterred the current governor from following Granholm’s path. She recently wrote on Twitter: “If you’re keeping score, when I took office, we had 0 battery manufacturing facilities. Soon we will have 5. We’ve brought home $16 billion in projects and secured over 16,000 jobs building EVs, batteries, semiconductors and clean energy.”

If you’re keeping score, it should be noted that Michigan still has zero battery manufacturing facilities. The 16,000 jobs the governor mentions are projected, not “secured.” And Michigan has a terrible track record of turning job projections into actual jobs. None of the major products it has subsidized have hit their projection. Most, in fact have produced no jobs at all. There are more jobs in paper product wholesaling in Michigan (2,756) than in battery manufacturing (2,521). And it is unlikely that government subsidies will do much to change those numbers.

Michigan needs more jobs. But spending billions of dollars for a tiny number of jobs in one industry is a terrible plan, with almost no return on investment for taxpayers. The best thing politicians can do is set a low, flat tax rate for all businesses and let industries develop on their own.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.