Tesla CEO Elon Musk warned Detroit’s Big Three that giving into the United Auto Workers' demands could put them in the fast lane to corporate failure.
Should UAW boss Shawn Fain prevail with his wish list, Musk said, the added costs would make their cars “unaffordable,” rendering the trio unable to compete and eventually forcing them out of business as rivals.
The Big Three are already little more than a nuisance for the Tesla CEO, with a combined 11% share of the EV market in the U.S. in the first half of this year, compared to his own company’s 60%. Ford even highlighted its struggle to compete with Tesla when it delayed its EV production targets and warned losses at its EV division would balloon to $4.5 billion this year.
“They want a 40% pay rise *and* a 32 hour workweek. Sure way to drive GM, Ford and Chrysler bankrupt,” Musk posted on Tuesday. If the Tesla CEO is guilty of embellishment, then that would make Ford boss Jim Farley just as guilty, as he's pretty much said the same this month.
Rather than gloating over his rivals’ predicament, Musk likely has far more reason for wanting to stick the boot into the UAW and its top leadership.
Fain recently said his plan was to negotiate a record contract for his members that he could then take to Tesla and other nonunionized auto plants to fulfill the UAW’s long-held dream of organizing labor at other carmakers.
Tesla has so far managed to keep unions out of its factories thanks to a carrot-and-stick approach that includes stock grants for employees that Musk has claimed have made them fabulously wealthy.
“The UAW stole millions from workers, whereas Tesla has made many workers millionaires,” he wrote last March.
When workers have attempted to organize, they soon found their employment at Tesla terminated in what they claim are cut-and-dried cases of old-fashioned union busting.
UAW riding a wave of popular support
This summer may have changed attitudes toward union membership, however, after the Teamsters used the pressure point of a strike to negotiate a contract that will eventually see UPS delivery drivers earn $170,000 in annual wages and benefits.
Emboldened by the Teamsters’ deal and hurting from high inflation, the UAW’s push for a greater share of the $21 billion in profits the Big Three made so far this year is riding a wave of popular support that suggests attitudes toward unions are shifting.
Its campaign even has both President Joe Biden and his likely Republican contender, Donald Trump, vying for a crucial UAW endorsement in the critical swing states that make up the Rust Belt.
Should the UAW succeed in achieving most of its demands, a hefty wage hike for Big Three workers could very well have Tesla workers expecting the same from Musk, whether they are unionized or not.
It doesn’t help the tycoon’s case either that the carrot of stock grants isn’t quite as tempting as in the past now that the price has effectively traded sideways for the past three years.
But if Tesla can keep a tight lid on labor costs while seeing them rise at GM, Ford, and Chrysler parent Stellantis, the trio could find it difficult to ever claw back a meaningful share of the EV market from Tesla.
“If the UAW gets everything they are asking for, it will very clearly damage the competitiveness of the Big Three companies materially,” Brandywine Global portfolio manager Patrick Kaser told Bloomberg.
