Shares of electric vehicle producers Rivian Automotive Inc (NASDAQ:RIVN) and Lucid Group Inc (NASDAQ:LCID)rose Wednesday after President Biden signaled support for the United Auto Workers strike, which could hurt the big three automakers’ own EV ambitions if it drags on.
If Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM) and Stellantis NV (NYSE:STLA, EPA:STLA) agreed to the union’s demands, which include a 40% wage increase, it would be an enormous headwind to their EV sales, according to analysts at Wedbush.
“If the Detroit Three took this current deal we estimate the average EV vehicle will go up in price by $3k-$5k to pass these costs onto the consumer and would ultimately be a torpedo to the future business models of the 313 area code,” the analysts wrote.
The current UAW proposal “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.”
On the other hand, a prolonged strike would likely introduce production issues.
"If a strike is lengthy (4 weeks+) then ultimately production and the EV roadmap could be pushed out into 2024 and delays would be on the horizon at this crucial period for GM, Ford, and Stellantis," the analysts wrote.
Rivian stock traded 0.7% higher Wednesday afternoon, while Lucid stock improved 0.9%.
Tesla shares, meanwhile, dropped 3.2%, perhaps fueled by CEO Elon Musk’s public opposition to the autoworkers' strike 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
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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