After President Biden joined the United Auto Workers picket line and expressed his support for a 40% wage increase, Elon Musk took to X to align himself with the automakers.
UAW workers, which are striking General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F) and Stellantis NV (NYSE:STLA, EPA:STLA) simultaneously, “deserve a significant raise,” Biden told picketers. “We saved them, it’s about time they step up for us.”
When asked if he supports a 40% pay increase, Biden said, “Yes, I think they should be able to bargain for that,” according to remarks released by the White House.
Musk, CEO of rival electric vehicle producer Tesla, said that the workers’ demands could bankrupt the automakers.
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
“They want a 40% pay raise and a 32 hour work week. Sure fire way to drive GM, Ford and Chrysler bankrupt in the fast lane,” Musk posted.
A wage increase “makes cars unaffordable, which leads to major sales drop, which leads to bankruptcy,” he added in a separate post.
Analysts at Wedbush are more in Musk’s camp, according to a note to clients Wednesday.
“We firmly believe that if GM, Ford, Stellantis accept anything close to the deal on the table the future will be very bleak for the US auto industry,” the analysts wrote.
“...[T]he math is dire in this current UAW proposal and would essentially put an albatross around the business models of the Detroit Big Three going forward. 40%+ cost increases (current UAW proposal) to the union workforce would make the move to electric vehicles an Everest-like uphill battle over the coming years and lead to major incremental opportunities for Tesla, Rivian, and foreign automakers (Europe, Japan) ready to go after the massive installed bases of GM and Ford over the coming years.”
They continued, not mincing words, "If the Detroit Three took this current deal we estimate the average EV vehicle will go up in price by $3,000-$5,000 to pass these costs onto the consumer and would ultimately be a torpedo to the future business models of the 313 area code.”
Political involvement in the UAW strike is set to continue Wednesday evening with a rally held by former President Donald Trump.
The rally will be held at Drake Enterprises, a non-union auto parts supplier. Some union members, albeit not leadership, are expected to attend.
The UAW strike, plus Biden and Trump’s involvement, could come up at the second GOP presidential primary debate, which the former president is skipping to hold his rally. The debate is scheduled for 9 pm ET on Fox Business.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
Follow him on Twitter @andrew_kessel