The automotive industry's major strike may escalate: Biden supports a 40% salary increase, while Musk warns that the three giants will soon go bankrupt.

The situation of the major strike in the US automotive industry may escalate.

On Tuesday, September 26, Eastern Time, while visiting a factory in the suburbs of Detroit owned by General Motors, US President Biden expressed support for the United Auto Workers' (UAW) demand for a significant salary increase. He said that the workers saved the automotive industry as early as 2008 and made many sacrifices when the car companies were in trouble. Now that their situation is good, their treatment and income should be much better than what they currently receive.

Biden told the striking workers to "keep going" and that they have the right to a significant salary increase and other benefits. Previously, the UAW had reduced its salary increase demand to 36% during labor negotiations. When asked on Tuesday if he agreed with the UAW's push for a 40% salary increase for automotive companies, Biden answered "yes."

Tesla CEO Musk subsequently warned that if the UAW's demands were met, the three major automakers would soon face bankruptcy. Musk posted on the social media platform X, formerly known as Twitter:

"A 40% salary increase and a 32-hour work week will undoubtedly put General Motors, Ford, and Chrysler on the fast track to bankruptcy."

Wallstreetcn previously mentioned that on September 15, the UAW launched a strike against the three giants - General Motors, Ford, and Stellantis. This is the first time in UAW history that a strike has targeted all three major automakers simultaneously and is one of the strongest strike waves in the United States in recent years.

The first batch of three factories participating in the strike accounted for 9% of North American automotive production, with approximately 13,000 workers participating and a total of about 3,000 employees being laid off by the three companies. Last Friday, the UAW announced an expansion of the strike to include 38 additional factories owned by General Motors and Stellantis, while Ford's strike remains limited to one factory.

Some commentators have said that this strike is one of UAW's actions to protect workers' interests during the transition of the automotive industry to clean energy. The strike is truly against "harvesting new technology" because the transition to electric vehicles may eliminate many jobs and significantly change or relocate other positions. It is estimated that the transition to electrification could lead to the loss of 35,000 automotive jobs.

UAW President Shawn Fain emphasized on September 17 that the transition to electric vehicles must be a fair one when rejecting Stellantis' 21% salary increase proposal. If the US government wants to use taxpayers' money to support the policy, American workers cannot be left behind.

Meanwhile, since successful new players in the electric vehicle field like Tesla have not formed unions, regardless of the outcome of the strike, Tesla CEO Musk has already won. The "Big Three" will definitely spend more money, and any salary increase will further enhance Tesla's significant cost advantage in the electric vehicle field. However, some experts believe that the strike could also have an impact on Tesla. The UAW's ability to secure higher wages may put pressure on Tesla as it goes through the process of unionizing.