How Michigan’s Tax Reform Bills Delayed the EV Future and Why Congress Risks Doing It Again

By Hengrui Liu

The final version of the tax and spending bill recently passed by House Republicans—referred as the “One Big, Beautiful Bill” (OBBB)—delivers a significant blow to the U.S. green industry. According to Bloomberg NEF, at least $150 billion in subsidies for solar, battery, and electric vehicle (EV) manufacturing between 2025 and 2032 are now at risk of being rescinded. If enacted, this bill would further undermine U.S. competitiveness in renewables, EVs, and battery manufacturing. What’s surprising is that we’ve seen this movie before. More than a decade ago, Michigan passed a similar set of policy reversals—policies that sharply curtailed the state’s clean energy ambitions. The case of Michigan’s tax reform bills of 2011 offers valuable lessons for today’s debate.

A Historical Parallel: Michigan’s Tax Reform Bills (2011)

In May 2011, Michigan Governor Rick Snyder signed into law a sweeping eight-bill tax reform package. The centerpiece was the replacement of the Michigan Business Tax (MBT) with a flat 6% Corporate Income Tax (CIT) for C-corporations, intended to simplify the tax code and make Michigan more business-friendly. However, the tax reform bills also repealed a range of targeted tax credits previously offered under the MBT—many of which had supported clean energy innovation. Snyder’s administration argued that these credits amounted to the government “picking winners and losers” and that eliminating them would reduce market distortion.

Among the key credits eliminated were:

  • Advanced Battery Manufacturing Credits: Enacted in 2009, these credits rewarded companies for producing traction batteries for EVs based on kilowatt-hour capacity.

  • Alternative Fuel Vehicle R&D and Manufacturing Credits: Aimed at firms developing EVs, hybrids, and vehicles using alternative fuels such as hydrogen and ethanol.

  • Hybrid Electric Vehicle R&D Credit: Worth 3.9% of qualified payroll, this credit incentivized firms employing engineers in advanced automotive hybrid systems.

The Fallout: Unrealized Promises and Strategic Setbacks

The immediate impact of these tax reform bills was the abrupt policy reversal facing Michigan’s nascent EV and battery industry. Just a few years earlier, the state had aggressively attracted advanced battery manufacturers using a combination of federal stimulus funds and generous state credits. By 2009, Michigan had awarded over $1.35 billion in incentives to support advanced batteries and EV manufacturing and development, positioning itself as a future hub for the industry. The projects were estimated to create 6,800 jobs within the next 18 months and up to 40,000 jobs by 2020. Battery manufacturing companies attracted to Michigan included A123 Systems, Johnson Controls-Saft Advanced Power Solutions, KD Advanced Battery Group, and LG Chem-Compact Power. Yet by 2011–2012, the EV market had yet to scale. With the repeal of state tax credits, firms that had made early investments now faced a future with little public support. The result was sobering:

  • Industry contraction: A123 Systems filed for bankruptcy in 2012. KD restructured that same year. Johnson Controls exited the EV battery sector in 2018.

  • Higher innovation costs: Repealing the hybrid/EV R&D credit increased the cost of doing cutting-edge research in Michigan. Although Detroit automakers retained their engineering centers due to local talent, the state lost a key lever to attract startups and new R&D hubs.

  • Missed investment opportunities: With key incentives gone, new EV investments stalled. Between 2011 and 2015, few firms chose Michigan for EV manufacturing. Notably, Tesla selected Nevada for its Gigafactory in 2014 after the state offered substantial incentives.

  • Underwhelming job creation: The battery facilities created fewer than 600 jobs, including both direct and indirect jobs, by the end of 2015. Michigan missed a key chance to develop a domestic EV supply chain. Ford’s electric Focus (2011) was assembled locally, but later flagship EVs like the Mustang Mach-E were built in Mexico. GM’s Chevy Bolt (2016) was assembled in Michigan, but its battery cells were mostly imported from South Korea due to limited local capacity.

Lessons for Today: What the OBBB Risks Repeating

Michigan’s experience offers a cautionary tale. The repeal of targeted clean energy incentives in 2011 slowed innovation, weakened local supply chains, and caused the state to fall behind in a key emerging sector. The U.S. risks repeating these same mistakes at a national scale. If the OBBB is enacted, we can expect:

  • A cooling of capital investment in green and emerging technologies;

  • Erosion of U.S. competitiveness in critical sectors like EVs, batteries, and solar;

  • Loss of global market share to countries offering stable, long-term industrial support;

  • Missed climate targets, as domestic production capacity fails to meet future clean energy demand.

 While the bill may offer short-term fiscal savings, history suggests these savings come at the expense of long-term industrial leadership and climate progress. Michigan’s tax reform was a pivot away from industrial policy at precisely the wrong moment—and the OBBB threatens to do the same on a national scale.


Hengrui Liu is a Postdoctoral Scholar at the Climate Policy Lab at the Fletcher School, Tufts University.

Climate Policy Labenergy transition, electric vehicles, Author - Hengrui Liu, 2025