The United Auto Workers (UAW) strike, which began as negotiations failed between the UAW and Ford, General Motors (GM), and Stellantis, comes at a time when these automakers are struggling with the transition to electric vehicles. While the strike may disrupt production for these companies, Tesla could potentially benefit from the labor strife.
Tesla has managed to fend off unionizing efforts at its U.S. factories, giving it a first-mover advantage in the electric vehicle market. As a result, the company has paid its workers significantly less than the Detroit 3. Even before any potential wage increases resulting from the strike, the Big Three U.S. automakers were already paying their workers 38% more than comparable Tesla workers.
According to Gene Munster, a managing partner at Deepwater Asset Management, Tesla is likely to emerge as the winner from the labor talks. He believes that the current UAW discussions will result in a steep increase in costs for the Detroit 3, pushing them further into the red.
In addition to the labor strike, the Detroit 3 automakers are also facing challenges in making their electric vehicles profitable. General Motors, for instance, decided to end production of its Chevy Bolt due to thin profit margins. The company plans to reintroduce the Bolt at a later date using a shared electric vehicle architecture in hopes of improving profitability.
While the Detroit 3 have ample liquidity to weather the strike, a prolonged labor action could hamper their electric vehicle ambitions, according to Moody’s Investor Service. The strike could affect production of electric models that General Motors recently launched, and it could delay Ford’s plans to ramp up production of its electric F-150 Lightning pickup truck.
Overall, the UAW strike poses challenges and uncertainties for the Detroit 3, especially as they navigate the transition to electric vehicles. Tesla, on the other hand, may find itself in a more favorable position as the labor strife unfolds.
– Claudia Assis, MarketWatch