The big winner of the car workers' strike - Tesla

If the United Auto Workers (UAW) really launches a strike, the "Big Three" in Detroit, who are transitioning to electric vehicles, will be impacted, while Tesla could potentially be the biggest winner in this labor dispute.

It is reported that Tesla has resisted unionizing its American factories for years, which has helped it expand its first-mover advantage in the electric vehicle field. It is likely to become the "winner of this labor negotiation," according to Gene Munster, Managing Partner of Deepwater Asset Management, in a statement on Thursday.

The contracts between UAW and Ford, General Motors, and Stellantis, the "Big Three," will expire at 11:59 p.m. Eastern Time on September 14, just three hours from now, but the two sides still have significant differences in their positions. If the negotiations fail, the union will launch a "stand" strike at midnight, targeting certain undecided factories for shutdown. UAW also stated that it will not extend the existing contract.

Munster said:

In terms of business electrification transformation, the automotive giants are already in a predicament. The current UAW negotiations will ultimately lead to a sharp increase in costs, further pushing them into losses.

Ford proposed a 20% wage increase over the four-year contract period, compared to the previous proposal of 9%; General Motors' latest proposal is an 18% wage increase; Stellantis' proposal is 17.5%. UAW, on the other hand, hopes for a wage increase of about 36% within the contract period, while the initially proposed annual compound wage growth rate was 46%.

Munster said, the wages paid to workers by the "Big Three" in Detroit are already 38% higher than those paid by Tesla, and if the workers go on strike, this gap may further widen.

It is worth mentioning that Ford, General Motors, and Stellantis have encountered difficulties in profiting from electric vehicles. For example, one of the reasons General Motors decided to halt production of the Bolt EV is that this compact electric vehicle has thin profit margins. To address this issue, General Motors has decided to re-produce the Bolt using a shared electric vehicle architecture in the future to improve profitability.

Moody's also pointed out the challenges the "Big Three" face in the transition to electric vehicles. The agency stated in a recent report that although all three automakers have sufficient liquidity to deal with a strike, long-term labor actions could hinder their ambitions in the electric vehicle sector.

Moody's stated that while workers are unlikely to achieve significant wage increases, the new UAW contract could allow for a maximum wage increase of 20%.

Moody's also said that the strike could potentially impact the three major automakers' plans to expand electric vehicle production. For example, General Motors plans to produce approximately 100,000 electric vehicles in the second half of the year, double the production in the first half. The key is that the strike may affect the production of electric vehicle models that General Motors has launched in the past 18 months, as the actual production of these models has been very limited so far.

In addition, Ford plans to increase the annual production of its best-selling electric pickup truck, the F-150 Lightning, to 100,000 units in the fourth quarter, compared to only 24,000 units in the first quarter.