- Wedbush analyst Dan Ives argues that UAW raises would be passed down to consumers.
- The union says workers are being left behind in the transition to EVs.
The current demands from the United Auto Workers union in their labor talks with Ford, GM, and Stellantis could make electric vehicles even more expensive, one analyst said.
As the UAW's historic strike at all three Detroit car companies drags through its third week – and President Joe Biden became the first sitting president in modern history to visit a picket line – Wedbush analyst Dan Ives says the companies' "nightmare situation" threatens their very business model.
"40%+ cost increases (current UAW proposal) to the union workforce would make the move to electric vehicles an Everest-like uphill battle," Ives said in a note to clients Wednesday. "We estimate the average EV vehicle will go up in price by $3k-$5k to pass these costs onto the consumer and would ultimately be a torpedo to the future business models of the 313 area code."
Ives, a prominent Tesla bull, has said that CEO Elon Musk is poised to come out the winner in the contentious Detroit labor talks. Musk's EV company uses cheaper, non-union labor, which puts the company in the position to continue controlling prices on EV with price drops that have so far done little to hit Tesla's bottom line.
GM, Ford, and Stellantis always head into quadrennial talks with the UAW looking to keep their labor costs "competitive" with companies that don't employ unionized workers. Typically that conversation has revolved around foreign automakers like Toyota and Honda, but this time around Tesla has dominated the competitive argument.
The cost of EVs
The Detroit 3 are spending billions of dollars to electrify their vehicle offerings, all while they still search for a formula for profitability for these vehicles. Executives have pleaded with UAW leaders to consider the broader implications of their demands.
"You want us to choose bankruptcy over supporting our workers," Ford CEO Jim Farley told CNBC on the eve of the strike deadline earlier this month.
The UAW, meanwhile, argues that workers are being left behind in the transition to electric vehicles and that is why they are digging in on demands like 40% wage increases and the elimination of a tiered wage structure.
"This is our future and we have to have a piece of that. Workers can't be left behind," UAW President Shawn Fain told reporters Tuesday after President Biden's visit to a GM picket line. "We're not against a green economy, but we're against a green economy and the workers get left behind. It's got to be a just transition."
Fain left room for the UAW to continue expanding its work stoppages if he doesn't see further progress at the table this week.