The clear winner in the “heavyweight boxing match” between the United Auto Workers (UAW) and the Detroit Three — GM, Ford and Stellantis — is Elon Musk’s Tesla Inc (NASDAQ:TSLA), according to analysts at Wedbush.
As the targeted strike by UAW ends its first week, with the threat of more workers joining if no progress is seen by Friday, the analysts said Tesla sits in a non-union position, with its biggest potential EV 313 competitors now facing mounting costs and complexities in the years ahead depending on how the strike plays out.
“Let's be clear: this is a growing nightmare situation for GM and Ford as both 313 stalwarts are in the early stages of a massive EV transformation path for the next decade that will define future success,” the Wedbush analysts wrote in a report.
“In this crucial period of EV execution, model roll-outs, distribution, marketing, with EV competition rising across the board the timing could not be worse.”
The analysts said GM and Ford face a battle going up against Tesla in the EV market while trying to satisfy union demands. If the strike stretched to four weeks or more, production and the EV roadmap could be pushed out into 2024 and delays could be on the horizon at a crucial period for all three competitors.
“However, if negotiations take place this week and some of these major proposals come through the billions of incremental annual costs will be damaging and ultimately increase the prices of EVs rolling out over the next 12 to 18 months to consumers,” the analysts said.
The analysts noted that the UAW’s key demands include a 40% plus hourly pay increase, a reduced 32-hour workweek, a shift back to traditional pensions, elimination of compensation tiers, and restoration of cost-of-living adjustments, among other items on the table.
“Our worry is this could be a long and nasty strike which would be an absolute debacle for the Detroit Three,” the analysts said.
“Take this UAW deal on the table and the business models in Detroit are not sustainable/profitable...a very frustrating quagmire situation as (GM CEO Mary) Barra and (Ford CEO Jim) Farley have done a great job transforming the stalwarts and ready for the EV transformation and now the UAW in like a meteor in the eyes of the Street.”
Contact the author at stephen.gunnion@proactiveinvestors.com