‘Potential Nightmare’: Ford, GM Thrust In Difficult Situation That Could Benefit Tesla, Says Analyst

The potential strike by the United Auto Workers (UAW) union, which represents hourly workers at Detroit’s big three automakers, could spell good news for Tesla Inc. (NASDAQ: TSLA), suggests one analyst.

The labor union has been engaged in summer-long negotiations with Ford Motor Co (NYSE: F), General Motors Co (NYSE: GM) and Stellantis NV (NYSE: STLA), the parent company of Jeep, advocating for unprecedented wage increases, the abolition of a tier system, and other benefits.

Should the discussions not yield a resolution by Sept. 14, a strike involving around 150,000 UAW workers across the U.S. is on the cards, Insider reported. 

This could reportedly cost the auto industry a staggering $5 billion in just 10 days. The looming strike presents “a potential nightmare situation for GM and Ford,” impacting the year-end production and inventory, and thereby affecting holiday season deals, according to a note by Wedbush analyst Dan Ives. 

Meanwhile, Tesla could emerge as a beneficiary, given its non-reliance on union labor, Ives said. 

“Tesla does not face similar issues which speaks to the complexity both GM and Ford face going up against the EV leader Tesla, while trying to satisfy rising union demands,” Ives said. The analyst further cautioned that a strike could potentially push production and the EV roadmap to 2024, introducing delays at a critical juncture for GM, Ford and Stellantis.

Ives indicated that the potential work stoppage, coupled with possibly substantial labor cost surges, could slow down Detroit’s attempt to beat Tesla in the EV race.

“[Ford CEO Jim] Farley and [GM CEO Mary] Barra both face some tough decisions ahead,” Ives remarked, emphasizing the scrutiny from the Street in the coming week over the choices the two will be forced to make. 

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