Since mid-September, employees of the “Big Three” car manufacturers – Ford, General Motors and Stellantis – have been on strike in the USA. Although Tesla is not directly affected, the electric car pioneer could also feel the consequences.
• Ford, General Motors and Stellantis employees go on strike
• Tesla not affected by union strike
• Beneficial for the Musk Group?
UAW strike at the Big Three
In the USA, the “Big Three” car manufacturers General Motos (GM), Ford and Stellantis are on strike by the UAW union, United Auto Workers. What is required is an increase in income by 36 percent over four years. Originally the demand was 40 percent, because top management’s income had grown by this percentage, according to The Shareholder. However, the “Big Three” are only said to be prepared for increases of up to 20 percent over four and a half years. Shwan Fain, chairman of the UAW, emphasized that these offers were inadequate given the high inflation and the good profit situation of the companies, reports The Shareholder. “Striking for a better future, to protect our communities and defeat corporate greed is not just our right – it is our duty,” Fain reportedly told members in a livestream, according to Business Insider.
Ford, GM and Stellantis are already paying their employees around 38 percent more than the electric car pioneer Tesla, according to financial news.
Tesla as a beneficiary of the strike?
Tesla itself is not directly affected by the strike because the workers there are not unionized. This makes the Musk Group the only major US automaker whose workforce is not represented by a union, explains Business Insider. The electric car manufacturer has been resisting unionization in its US factories for years.
Tesla is currently not under pressure in this regard. The latest sales figures were also positive: While the electric car manufacturer sold 325,291 vehicles in the USA in the first half of the year, according to Reuters, GM’s Chevrolet lagged far behind with just 34,943 sales, but is still in second place, directly behind Tesla.
Gene Munster, managing partner at Deepwater Asset Management, thinks Tesla should emerge as a big winner from the strike: “The major auto companies are in a bind when it comes to converting their business to electric power, and the current UAW discussions will “ultimately lead to a steep increase in costs that will push them further into the red,” quoted Financial News.
As the UAW strike wraps up its fourth day, it’s more clear that $TSLA is the winner. I want to warn you there are a lot of numbers to follow:
– Gene Munster (@munster_gene) September 18, 2023
Tesla also achieved a breakthrough: the electric car company was able to halve the production costs for its vehicles thanks to a newly developed manufacturing process, according to Reuters.
Elon Musk: The “Big Three” are on the fast track to bankruptcy
In any case, the strike is likely to mean additional effort for Ford, GM and Stellantis. If the “Big Three” comply with the demands – even if only to a lesser extent – wage costs are likely to rise dramatically. In any case, car companies are currently having difficulties producing their electric cars profitably, reports Finanznachrichten. Although the demand for electric vehicles is currently very high, the strike comes at the worst possible time because GM, Ford and Stellantis actually wanted to ramp up their electric car production. According to Tesla boss Musk, the demands are “a sure way to drive GM, Ford and Chrysler on the fast track to bankruptcy,” he commented on X.
They want a 40% pay raise *and* a 32 hour workweek. Sure way to drive GM, Ford and Chrysler bankrupt in the fast lane.
– Elon Musk (@elonmusk) September 26, 2023
According to Musk, the competitiveness of the “Big Three” would be extremely damaged if the UAW prevailed, he also told Bloomberg.
Musk too optimistic?
UAW boss Fain still doesn’t want to leave Tesla alone, as Teslamag says. In a CBS interview, he said that they would first negotiate good contracts with the other car manufacturers, and then they would also want to organize other factories so that the employees there also received their fair share. He described the pay at Tesla as “miserable”.
In the longer term, experts expect that Tesla will also have to follow suit if the UAW level is high. Barclays analyst Dan Levy also predicts that the strike will also have an impact on the Musk Group: “We believe that their costs will rise. That will of course happen, not just with Tesla, […]. I think that is of course the case. Can they unionize? We have noted in the past that it was a tougher effort by the UAW, and that was the case in part because Tesla has benefited from paying its employees with stock awards.”
How the UAW strike will ultimately turn out and what impact its outcome will actually have on Tesla can only be speculated at the moment. Things remain exciting for car manufacturers in the USA.
Editorial team finanzen.net
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