Munster Weighs In On Reports Of Unionization Move At Tesla: 'Employees Will Likely Vote Down The UAW And Instead Settle For...'

Fresh off its recent success with Detroit’s big three, the United Auto Workers union could reportedly be training its gun at the non-unionized Tesla, Inc. TSLA. A fund manager on Tuesday weighed in on the potential impact of UAW succeeding in its pursuits.

What Happened: “Tesla's roughly 20,000-worker plant in Fremont, California, currently has a UAW organizing committee whose members are talking to coworkers about the advantages of collective bargaining,” Bloomberg reported late Monday, citing people familiar with the matter.

Commenting on the report, Deepwater Asset Management’s Gene Munster said, “It’s going to take a couple of months to sort this out.” Tesla employees will likely vote down the UAW and instead settle for a 20% pay raise, the fund manager said. The percentage revision would be less than the 25% hike Detroit’s big three agreed for, he added.

See Also: Everything You Need To Know About Tesla Stock

Why It’s Important: The development could not have come at a worse time for Tesla. The company’s main operating metric, namely the auto margin, excluding regulatory credits, is on a downward trajectory, thanks to a series of price cuts the company was forced to implement to jumpstart sales growth.

In the third quarter, the core margin fell further to 16.3%, significantly missing the consensus estimate of 18.02%. As a result, the bottom line missed the consensus estimate.

Munster said he expects Tesla’s core margins will be capped for the next year at around 16%, in line with what was reported in September. “If Tesla wages remain stable, I would expect margins to inch back to 18% over the next year,” he added.

Tesla traded up 0.96% at $199.25 in early trading on Tuesday, according to Benzinga Pro data.

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