Michiganders could save up to $2,500 on a new car under Whitmer rebate proposal

Gov. Gretchen Whitmer stands by as Lt. Gov. Garlin Gilchrist sits in a 2024 Chevrolet Silverado 2500 HD ZR2 while touring the floor during the 2023 North American International Auto Show held at Huntington Place in downtown Detroit on Thursday, Sept. 14, 2023.
  • Oops!
    Something went wrong.
    Please try again later.

For the third time in a row, Gov. Gretchen Whitmer has proposed a tax savings plan aimed at boosting vehicle sales in Michigan.

The "MI Vehicle Rebate" proposed by Whitmer earlier this month comes after two previous unsuccessful attempts asking lawmakers to approve similar plans to lower the cost of purchasing a new electric vehicle in the state.

Whitmer's latest proposal for a state tax rebate lowers cost based on the type of vehicle purchased:

  • $2,500 for a new battery electric or hybrid vehicle made in a unionized facility

  • $2,000 for a new battery electric or hybrid vehicle made in a nonunionized facility

  • $1,500 for a new internal combustion vehicle made in a unionized facility

  • $1,000 for a new internal combustion vehicle made in a nonunionized facility

The head of the Michigan Automobile Dealers Association praised the proposal. "This program will directly support Michigan residents, while also highlighting the importance of New Vehicle sales to our state economy. New vehicle dealers across Michigan look forward to the opportunity to collaborate with state leaders to seamlessly implement and promote this incentive program," said association President Cliff Cicotte in a statement earlier this month.

Whitmer asked lawmakers to approve similar proposals in her last two budget requests, but her electric vehicle rebate and temporary sales and use tax exemptions on electric vehicle purchases never made their way in the final budget bills signed by the governor.

But this time, Whitmer has cut her latest proposal in half, asking the state Legislature to allocate $25 million to fund her proposed "MI Vehicle Rebate" program compared with the $50 million she asked for in her proposed 2023 budget and $48.4 million she sought in the 2024 budget. Also new is the proposal to include a smaller tax rebate for internal combustion engine vehicles; previous iterations only incentivized EV purchases.

Whitmer plans to ask lawmakers to allocate the funding in her upcoming State of the State address. Whitmer's proposal does not specify a date when the rebate would expire. Instead, the savings program would continue until the money runs out.

Whitmer tied the new plan to the new contract agreements the United Auto Workers (UAW) reached with the Detroit Three automakers. "Michigan's auto industry is the backbone of our economy, and this year, the hardworking men and women of the UAW and our world-leading automakers negotiated and ratified a record contract. Now, let's keep making the world’s best cars and trucks while lowering costs for families by thousands of dollars," Whitmer said in a Dec. 13 news release.

The UAW declined to comment on whether it provided input on Whitmer's latest proposal.

Asked why Whitmer's proposal includes an incentive for traditional combustion vehicles given the governor's push to support Michigan's electric vehicle sector, Whitmer press secretary Stacey LaRouche called lowering costs and growing the state economy the administration's "North Star."

"The economy is improving, but there is always more we can do to alleviate costs, which is why the governor announced this proposal to help as many families as possible," LaRouche wrote in an email. "Michigan is home to hard working men and women and outstanding auto makers who make the world's best cars and trucks, both electric and internal combustion engine."

New Michigan Laws: 3 bills Whitmer signed before the end of the year

Auto industry observers did not identify a significant impact on car sales stemming from the 46-day UAW strike this past fall against Ford Motor Co., General Motors and Stellantis, but many point to high interest rates and steep transaction prices as barriers to any near-term surge in new or used auto sales. As for electric vehicles, the demand was there, but it was not as robust as many automakers had hoped for this year. At GM, troubles with battery production hampered it from getting many of its new EVs to market, leaving CEO Mary Barra to tell Wall Street she was "disappointed" with GM's EV sales this year, but the problems are fixed and next year will be better.

The proposed Michigan tax rebate could save buyers up to $10,000 when combined with federal incentives, according to Whitmer's office.

Free Press staff writer Jamie L. LaReau contributed to this report.

Contact Clara Hendrickson: chendrickson@freepress.com or 313-296-5743. Follow her on X, previously called Twitter, @clarajanehen.

This article originally appeared on Detroit Free Press: Whitmer's proposed rebate to lower costs of purchasing a car