Tesla Already Dominates US EV Sector: What Could UAW Strike Mean For Competition, Market Share?

Factory workers at three U.S. automakers could strike as early as this week if a deal is not reached with the United Auto Workers union.

The strike could lead to lower profits for automotive companies, higher auto prices for consumers and more market share gains for electric vehicle leader Tesla Inc TSLA.

UAW Strike Deadline Affects 140K Autoworkers: The United Auto Workers union is seeking increased pay, a shortened work week and better retirement benefits for its workers.

If a deal is not reached by a Sept. 15 deadline, strikes could occur at U.S. factories later this week.

The three companies impacted by the UAW strikes are General Motors Company GM, Ford Motor Company F and Stellantis NV STLA, with over 140,000 autoworkers between them. 

Strikes by autoworkers could impact the U.S. gross domestic product and hurt areas like the state of Michigan, the home of GM, Ford and Stellantis. 

A UAW strike in 2019 lasted 40 days and had a financial impact of $3.6 billion, according to AP News.

Related Link: UAW President Slams Ford, GM, Stellantis For Delay Tactics In Contract Talks 

A Detroit Strike's Impact On Tesla: Workers at Tesla are not impacted by the strikes as they do not belong to unions. In fact, Tesla could come out as a winner from strikes at its rivals and increase its lead over traditional automakers that are working to ramp up electric vehicle production and deliveries.

“Tesla would be the big winner if there’s a big strike,” Axios reporter Nathan Bomey recently told Yahoo Finance. 

Bomey said that Tesla could also be a winner if the automakers cave and give into the huge demands in pay increases, which would lead to lower margins or the need to raise vehicle prices.

“We’re talking about a risk of potentially billions of dollars here, and that’s why the automakers are very, very nervous. I think there’s also the possibility of price increases if the contract negotiations end up with a deal that the automakers have to pass on the cost.”

While Tesla could be a winner from the potential strike, University of Michigan professor Erik Gordon doesn’t think the stock price will see an immediate lift.

“The long-term benefit is that there is nothing a company likes to see more than its competitors’ costs go up,” Gordon told Morningstar.

Gordon said Tesla could win over the long term.

“It’s good news for Tesla if the UAW makes it harder for the Big Three to make the transition by reducing the companies’ flexibility.”

Ford is among the companies that is expanding its production capabilities for electric vehicles — while also losing money on every EV sold.

What's Next: A strike could have a large impact on the future of traditional automakers. 

While Tesla may be a winner in the short term based on the union strikes and new contracts, the company could also see pressure down the road.

“One big question after this is all over, is … when and will the UAW start to take a crack at organizing Tesla again?” Bomey said.

The UAW has made limited attempts and had limited success with unionization efforts at Tesla factories. The UAW previously accused Tesla CEO Elon Musk of illegally trying to prevent union organizing efforts.

Musk has made his opinions of the UAW quite well known, but also stands behind a belief that his workers are happy and paid well. Musk even invited the UAW to come to a factory and attempt to unionize the employees.

Read Next: Elon Musk Says Unions Control The Democratic Party 

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