The United Auto Workers (UAW) have plunged into a high-stakes strike with Detroit’s Big Three automakers – General Motors, Ford, and Stellantis – demanding pay raises and striving to expand their influence through unionization. Notably absent from this contentious conversation is Tesla, which, in stark contrast to its legacy rivals, has remained untouched by UAW demands, attracting the attention of investors. Since the commencement of the UAW strike just four days ago, Tesla stock has surged by an impressive 7%, while Ford and General Motors have seen comparatively modest gains of 4% and 1.3%, respectively.
This significant divergence in stock performance has investors taking note of the potential financial advantage that Tesla may gain in its quest to expand its market share, particularly with its entry-level Model 3 and other offerings. Dan Ives, a renowned analyst at Wedbush and a Tesla enthusiast, remarked in a recent client note, “The clear winner in this Game of Thrones Battle between the UAW vs. GM/Ford is Musk and Tesla, with champagne now on ice which sits in a non-union position and its biggest potential EV competitors now facing mounting costs and complexities in the years ahead, depending on how this ultimately plays out.”
Ives went on to elaborate that an approved 40% wage increase, if granted to UAW workers, could significantly impact prices and might ultimately be passed down to consumers in the form of higher electric vehicle (EV) prices. Citigroup analyst Itay Michaeli has estimated that the UAW strike alone could cost General Motors operating profits amounting to a staggering $140 million for this year. Furthermore, the analyst anticipates a comparable financial toll on the retail prices of Ford vehicles produced in their striking Michigan assembly plants.
Adding his perspective to the unfolding drama, former Chrysler CEO Bob Nardelli stated, “No one wins in a strike, particularly if it’s prolonged. You never make up the wages that you lost. You never make up the customers that you may have lost. And the impact could be devastating.”
While the ongoing UAW strike represents a bold effort to secure improved compensation for auto industry workers and expand unionization, it appears to be inadvertently offering Tesla a substantial financial advantage. If the UAW cannot successfully negotiate wage packages that are both lucrative for workers and cost-effective for consumers, Tesla stands to gain substantial market share from its Detroit rivals.
As the UAW strike continues with no clear resolution in sight, Wall Street is closely monitoring the mounting financial repercussions affecting Detroit’s Big Three. Meanwhile, stock of Tesla continues to surge, leaving investors to ponder the significant advantage this may confer on the Silicon Valley automaker in the ever-evolving landscape of the automotive industry.
Source: Yahoo Finance
