Tesla, Rivian and other EV pure plays look for an edge while Detroit automakers face crippling strike
Monty Rakusen
The automobile sector is another day closer to what could be a painful strike by 146K United Auto Workers members with contract negotiations still stalled.
Detroit automakers General Motors (NYSE:GM), Ford Motor (NYSE:F), and Stellantis (STLA) have largely rejected the demands of the UAW, which include higher compensation and increased pension benefits. So far, only Ford (F) has come back to the UAW with a contract proposal for a 9% wage increase over the term of the contract, plus a one-time payout that brings the total raise to 15%. "Overall, this offer is significantly better than what we estimate workers earn at Tesla and foreign automakers operating in the U.S.," stated Ford (F) CEO Jim Farley.
The United Auto Workers is set to launch a full strike on September 14 if a deal is not worked out by then. Wedbush Securities analyst Dan Ives called that scenario a potential nightmare for General Motors (GM) and Ford Motor (F) as both 313 stalwarts are in the early stages of a massive electric vehicle transformation path for the next decade that will define future success. "In this crucial period of EV execution, model roll-outs, distribution, marketing, with EV competition rising across the board the timing could not be worse," he warned. A strike could push out production timetables and the electric vehicle roadmap for the Detroit automakers at a crucial period.
What to watch: U.S. electric vehicle makers such as Tesla (NASDAQ:TSLA), Rivian Automotive (RIVN), Fisker (FSR), and Lucid Group (LCID) could benefit if the Detroit automakers have to pull back on their ambitious EV goals. While the broad auto sector has plenty of macroeconomic headwinds still in the mix, Tesla (TSLA) and the pure EV startups could face less competition than envisioned on key models if the UAW strike cripples the EV push out of Detroit or forces much higher prices on mass market models from the legacy players.

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Ford Motor offers UAW workers a 15% combined wage raise