As U.S. auto industry workers begin a general strike, two well-known technology analysts pointed out that Tesla will be one of the biggest beneficiaries of the strike. Gene Munster of Deepwater Asset Management said the union's demands include the elimination of pay grades, a 35% pay rise, reinstatement of cost-of-living allowance increases, increased benefits such as health care, traditional pensions, a four-day work week and a 32-hour work week, as well as better protections for workers who lose their jobs due to the cancellation of gas-powered trains.
Even before the upcoming raises, the Big Three were paying workers 39% more than similar workers at Tesla, and now that gap is likely to widen, the fund manager said.
Taking into account profit sharing, Munster said if the UAW succeeds in increasing wages by 25%, it could result in a net increase of 20% in overall compensation. Labor costs at the three major automakers, GM, Ford and Stratis, will increase to about $80 an hour, 67% higher than Tesla.
Munster factored in a 15% pay increase for Tesla employees, although Tesla was not involved in UAS negotiations. He said that taken together, the manufacturing labor costs of the three giants will be 40-45% higher than Tesla.
Citing data from Anderson Economic Group, Munster said that a 10-day UAW strike would lead to the closure of the three major automakers, potentially causing losses of more than $5 billion to automakers, suppliers and workers.
"While the Big Three will be forced to pay more labor, they can't afford it," the tech analyst said.
"This will give Tesla more room to keep prices low, which will result in negative electric vehicle margins for the Big Three over the next two-plus years," he said, adding that as they transition to electric vehicles, electric vehicle losses will increase, which will benefit Tesla.
Daniel Ives, a technology analyst at Wedbush Securities, also said that a strike lasting more than four weeks would deal a heavy blow to GM and Ford's electric vehicle ambitions in the first half of 2024. “In this ‘Game of Thrones’ battle between the UAW and GM/Ford, Tesla is the clear winner because of its non-union status,” he said.
The analyst said Tesla's biggest potential EV rival now faces increasing costs/complexities over the next few years, depending on how it plays out.
The analyst sees this as a potential nightmare for GM and Ford as they are in the early stages of a massive electric vehicle transition over the next decade that will determine future success.