Potential Ripple Effects: UAW Strike Against Detroit Three Could Impact Tesla Workers’ Wages

Credit: Tesla

The ongoing strike by the United Auto Workers (UAW) against the Detroit Three automakers, namely Ford, General Motors (GM), and Stellantis, may have far-reaching implications, including the possibility of affecting wages for Tesla workers, according to insights from Barclays senior autos analyst Dan Levy.

During an interview with CNBC’s “The Exchange,” Levy indicated that if the UAW strike concludes with agreements on increasing worker pay at the traditional Detroit automakers, Tesla may feel the impact as well. As things currently stand, both Ford and GM already pay their hourly workers more than Tesla does. Therefore, if the UAW’s demands for higher wages are met, it could further widen the compensation gap between these automakers and Tesla.

Levy underscored the potential implications of the strike on labor costs across the entire U.S. automotive industry, including Tesla. He suggested that Tesla would likely need to raise wages for its workers to mitigate the risk of unionization.

“We think their costs will increase. This is naturally going to happen, not only across Tesla but probably also across the transplant OEMs. I think this is naturally the case. Can they unionize? We’ve noted in the past that it’s been a tougher effort by the UAW, and that in part has been because Tesla has benefited from paying its employees with stock comp,” Levy explained.

He further highlighted that with Tesla’s stock currently at its current level, Tesla workers might not receive the same stock compensation benefits in the future. Consequently, Barclays anticipates that wages may see an upward trajectory for Tesla employees.

This prediction is noteworthy, especially in light of recent remarks made by Tesla CEO Elon Musk, who suggested that the UAW’s demands could lead to financial troubles for the traditional Detroit automakers. While it remains uncertain how Musk views the potential effect of wage increases on Tesla, it is challenging to envision a scenario where demands for a 40-percent pay raise, akin to what the UAW is requesting from the Detroit Three, would be made of Tesla.

It’s important to note that Tesla stands out as the only major American automaker without union representation in the United States, and Elon Musk’s stance on unionized labor at Tesla is well-documented.

Efforts by the United Auto Workers and Workers United trade unions to unionize Tesla’s workers in California and New York have faced obstacles, with Musk actively resisting these attempts. The outcome of the ongoing UAW strike against the Detroit Three could potentially add another layer of complexity to the labor dynamics within the automotive industry.

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