U.A.W Strike and Tesla
Recently, in the middle of September, autoworkers at some of the largest automakers walked off the job. Nearly 13,000 United Auto Workers (U.A.W) members at facilities in Ohio, Michigan, and Missouri participated and created a targeted strike that could spread further throughout the nation.
The United Auto Workers union had a four-year contract that expired on September 14, 2023, with General Motors, Ford Motor, and Stellantis, the owners of Chrysler, Jeep, and Ram. Until the strike is finished, the businesses and the unions are not close to negotiating new contracts.
“This is our generation’s defining moment,” U.A.W President Shawn Fain said in describing the reasons why his union’s members went on strike and how it was something the union had never done in its 90-year history.
The U.A.W’s main demands include wage hikes of up to 40%. The longer the strike lasts, the more of an impact it will have on the American economy and the markets for both gas- and electric-powered automobiles.
The disagreement between automakers and autoworkers has broad implications since it may result in fewer new cars being sold, which might increase fuel inflation and require the Federal Reserve to maintain high interest rates.
U.A.W Strike Impact on the Electric Vehicle Market
The U.A.W strike has dangers and benefits for the market for electric vehicles, but from the standpoint of the manufacturers, some will look for benefits while others can profit from the void that the strike has created in the market.
The impacted auto Chief Executives claim that their companies already pay far more than their competitors in the market for electric vehicles, like Tesla and Toyota, whose U.S. employees are not unionized. Additionally, they claimed that such a demand for significant pay increases could undermine their attempts to produce electric vehicles and transition away from gasoline-powered automobiles.
Jim Farley, the CEO of Ford, claims that if unions received what U.A.W members were requesting, they would be compelled to terminate all of their investments in the electric vehicle sector and shift their attention to other market areas.
Ford employs the most union workers of all the automakers; hence the U.A.W strike may have the greatest impact on Ford as compared to other automakers.
Tesla’s Benefits in the Market
The fact that there is no union for Tesla’s US employees is a major positive during this strike. However, Elon Musk, the CEO of Tesla Inc., has frequently attacked and mocked these unions on social media platform X, formerly known as Twitter.
Additionally, even though Tesla employees are not represented by a union, the U.A.W. is still working to organize the company’s workforce as part of its ongoing efforts to win a significant victory for its members. Additionally, the U.A.W. has failed in the past to unionize Tesla employees.
Rahul Kapoor, a professor of management at the University’s Wharton School, is one of the experts who has said the following about Tesla’s advantages during the strike, “Clearly, the narrative out there is that this can’t be good for the Big Three it’s good for Tesla,”
Then he added, “If I’m an autoworker with wages lower than what Ford and GM are paying, and I hear there is a substantial increase, it’s very likely I would want to take that in”.
Consequently, there are numerous ways for Tesla to profit from the U.A.W. strike. For example, they can cut pricing so that fewer new vehicles are available overall on the market as a result of the strike’s impact on the major three automakers.
Due to the significant profits, it has made over the years, Tesla has already reduced the price of its electric vehicle on the market, making it more difficult for the major three manufacturers to gain ground in the electric vehicle industry. Tesla currently holds a 60 percent market share in the US market for electric vehicles.
Additionally, Tesla requires more workers to maintain its significant edge in battery and software technologies. To make the most of the labor force during strikes, hefty pay is offered.
After all, Tesla would still be a prime target for unions looking to gain the upper hand more quickly, and doing so would come with significant risks and difficulties. Tesla, on the other hand, resists unions in order to gain an immediate advantage.
“Most of these workers in those companies are scraping to get by so that greedy people like Elon Musk can build more rocket ships and shoot themselves in space,” U.A.W President Shawn Fain has frequently criticized Elon Musk in the media.
Although it will be difficult for unions to organize Tesla manufacturers, there are signs that they are making progress in this area slowly. According to Mike Miller, the director of the U.A.W’s Region 6, which includes California and Nevada, where Tesla makes cars and batteries, “there is a group of Tesla workers who are actively talking about forming a union and creating the best representation they can for themselves and their coworkers through collective bargaining.”
Given that the American vehicle market is among the largest in the world, there is a risk that it will have an impact on other markets as well. Additionally, because the auto industry is a significant contributor to the American economy, this union activism will also have an impact on it. The future of the electric vehicle market will therefore depend on how and when these U.A.W strikes terminate.