At the very least, Elon Musk stands to benefit from the United Auto Workers strike. That might signal difficulty for Vice President Joe Biden’s plans to influence the future of the car sector.
As the Big Three automakers prepare to compete with Musk’s Tesla in the expanding electric vehicle market, the UAW’s work stoppage presents yet another major difficulty. Analysts predict that the difference between the labour expenses of the U.S. auto titans and Tesla’s non-union facilities would expand if the automaker reached a generous deal with the United Auto Workers (UAW).
In the latest clash between the White House’s plans and those of the mercurial billionaire, Biden’s hopes of basing the next generation of automobiles and trucks on unionised labour would be undermined by Tesla’s sustained domination on electric cars.
Musk has been victorious in some early confrontations with the government, notably his efforts to have Tesla’s charging system become the de facto standard among major manufacturers.
“Tesla’s competitive advantage over the Detroit Three is going to widen,” predicted Garrett Nelson, vice president of equity research at investment advice firm CFRA Research. Even with the concessions the manufacturers have already provided, the wage disparity between Ford, GM, and Stellantis and Tesla is certain to widen, he said.
Requests for comment from the White House, Tesla, and the United Auto Workers union all went unanswered.
The UAW workers’ walkout at the three GM, Ford, and Stellantis facilities on Friday will put to the test the warming of relations between Tesla and Biden’s White House during the past year. If a non-union competitor benefits from the strike, it will add to the pressure that Biden is already feeling from the union about the effects of his electric vehicle push on their jobs.
Tesla accounted for 60% of new electric vehicle sales in the U.S. in the second quarter of this year, according to Cox Automotive, but the pro-labor White House was reluctant to even acknowledge this for much of Biden’s presidency.
While Tesla and Musk were ignored, executives from General Motors, Ford, and Stellantis were invited to a huge EV event on the White House lawn in 2021. The White House press secretary at the time, Jen Psaki, was asked if Tesla wasn’t invited because of the company’s anti-union stance. She said, “Well, these are the three largest employers of the United Auto Workers, so I’ll let you draw your own conclusions.”
During a meeting about the administration’s hopes for a major climate measure in January 2022, Vice President Joe Biden met with the CEOs of General Motors and Ford, but no one from Tesla, causing Elon Musk to call the president a “damp [sock] puppet in human form.” The White House reportedly told CNBC in private that it wouldn’t invite Musk to future talks with corporate leaders, and the news outlet published this later that year.
During that time, Musk responded by saying that Biden “has pointedly ignored Tesla at every turn and falsely stated to the public that GM leads the electric car industry.”
However, with Vice President Joe Biden’s recent drive to have EVs account for 50% of all new vehicle sales by the end of the decade, Tesla’s dominance in the EV market has become increasingly harder to ignore. As a result, more and more people are pleading with Musk and Tesla to do something.
Musk met with top White House aides John Podesta and Mitch Landrieu in January to discuss the administration’s tens of billions of dollars in incentives for electric vehicles. After some negotiation, Tesla agreed to make some of its charging stations available to the public, and the White House announced the deal a few weeks later.
The Obama administration has backed efforts this summer to make Tesla’s charging system the norm. A few months after the Biden administration required a competing charging standard for its federally financed chargers, Tesla’s EV rivals, led by Ford and GM, elected to embrace Tesla’s North American Charging Standard.
The full $7,500 consumer tax credit that the Treasury Department is granting under last year’s Inflation Reduction Act is also applicable to different variants of Tesla’s Model 3, Model Y, and Model X, at least for buyers who earn less than the law’s income restrictions.
Ford, GM, and Stellantis all need to put out new electric vehicle models and decrease prices to attract new customers, but a prolonged strike could make that difficult.
Some businesses have warned that this is especially true if the Detroit automakers end up making significant sacrifices on salaries and benefits.
According to a statement released by Ford on Thursday night, “which are already significantly higher than the labour costs of Tesla, Toyota and other foreign-owned automakers in the United States that utilise non-union-represented labour,” the union’s demands would more than double the company’s UAW-related labour costs.
Ford estimates internally that its labour expenses, including pay and benefits, are currently 25 percent more than Tesla’s. According to anonymous Ford employees discussing internal forecasts, under the UAW proposal, that difference would widen to 67%.
Given Tesla’s precipitous price cuts this year, this might severely hamper the company’s ability to compete.
Tesla, according to Tyson Jominy, J.D. Power’s vice president of data and analytics, is “operating on a different plane” when it comes to the pricing of its electric vehicles.
As a result, “that is leading to some very significant market share gains for Tesla, with or without the strike,” Jominy added.
Jominy predicts that the Big Three automakers would lose 200,000 sales to their competitors and be obliged to hike prices by 2–5% if there were a strike lasting the six weeks that the last strike against GM lasted in 2019. The strike could hinder the introduction of new models, even though electric vehicles are likely to be relatively protected from such consequences due to substantial inventories.
Chevrolet’s Blazer EV went on sale in early September, and the Equinox EV and Silverado EV will follow later in the autumn. Ford’s electric Explorer will be released sometime in the summer of 2019.
“There’s a lot of product coming,” Jominy remarked.
When asked for response, Ford and GM both remained silent. Stellantis opted not to elaborate.
However, the union may still benefit from the Big Three’s defeat. Historically, Tesla has had tensions with UAW due to the company’s anti-union stance.
In March, a federal appeals court decided that Musk’s 2018 tweet threatening to take away stock options was an unconstitutional attempt to intimidate Tesla workers organising with the UAW at its factory in Fremont, California. Musk is challenging the verdict.
A complaint was filed with the National Labour Relations Board in February after the automaker fired 18 software workers in Buffalo, New York, less than 24 hours after they announced their desire to unionise.
Musk said on his social media platform X (previously Twitter) on Thursday that the factories where his companies Tesla and SpaceX produce their products “have a great vibe” and encourage “playing music and having fun.”
When compared to the UAW, “we pay more,” Musk noted, “but performance expectations are also higher.” According to one executive, “quite a few of our factory techs who work on the line have become millionaires over the years from company stock grants.”
In an interview with CNBC on Wednesday, UAW President Shawn Fain dismissed concerns over Tesla’s competitive advantage.
I don’t care if Elon Musk builds more rocket ships so he can fly to outer space and things since competition is code for race to the bottom, as Fain put it. Working people need economic fairness, and that’s our main priority.
According to a Tesla lobbyist, the feelings are mutual.
Shearman & Sterling partner Mona Dajani remarked, “Elon has been pretty vocal about not being pro-union.” As he sees it, his employees aren’t unionised but they do receive stock options that are among the best in the auto industry.
He thinks the UAW is outdated and obsolete; Dajani claims that he pays his employees more than the going rate.