CEO of Tesla, Elon Muskattack him United Auto Workers Tuesday, saying the union’s demands “will accelerate GM, Ford and Chrysler into bankruptcy.”
President Joe Biden supported the UAW’s central demand salary increase while visiting a picket line at a General Motors plant in suburban Detroit early Tuesday. The union is on strike against General Motors, Ford Motor and Stellantis, makers of the Jeep, Chrysler and Dodge brands. The union, which has taken rare simultaneous strike action against three Detroit automakers, has reduced its demand for wage increases in negotiations from 40 percent to 36 percent.
Tesla and other electric car companies only such as Lucid Group and Rivian Automotiveand not a union. They typically use restricted stock units and employee stock purchase plans to obtain a large portion of total compensation. The UAW is concerned that electric vehicles, which typically require fewer moving parts and fewer workers to manufacture, will cost jobs and lower wages.
Musk isn’t alone in saying a big UAW win could mean trouble for Detroit automakers.
“If the UAW gets everything it’s asking for, it will completely destroy the competitiveness of the Big Three,” Patrick Kaser, a portfolio manager at Brandywine Global, said in an interview last week.
In 2017, the UAW began working to organize workers at Tesla’s Fremont, California factory, as the company struggled to improve the Model 3 sedan. In 2018, Musk he tweeted: “There is nothing stopping the Tesla team at our factory from voting unanimously. They could do that now if they wanted to. But why pay union dues and give up free stock options?”
Unionization efforts at the Fremont plant did not gain momentum enough to reach a vote. A bipartisan group of US labor board members decided in 2021 Tesla repeatedly violated federal law in Fremont, including “forcefully interrogating” party supporters and expelling one due to his activism. Tesla has denied wrongdoing and is appealing the decision.
In February, Workers United accused Tesla of laying off dozens of workers in response to a union strike at the company’s Buffalo, New York, plant.
Despite the headwinds, major gains for UAW workers at Detroit’s traditional automakers, combined with strong public support for unions, could once again inspire Tesla workers to organize, Catherine said. Fisk, a professor of labor law at UC Berkeley.
“The union it’s very difficult under US law,” Fisk said. “That said, workers successfully unionized against worse behavior in the 1930s. It’s happened before, it can happen again; It’s just a torturous process.”
Tesla has an industry-leading profit margin y Musk has promised to put a higher priority than profit. The electric car maker has cut the price of its cars this year, even as Detroit companies make a costly shift from making internal combustion engines to electric ones.
“If it’s the Detroit Three, they’re running two operating systems,” said K. Venkatesh Prasad, senior vice president of research and chief innovation officer at the Automotive Research Center in Ann Arbor, Michigan, in a telephone interview. “The profit made on ICE cars is what is funding the transition to electric cars, which will be unprofitable for a while.”
“The biggest competitive advantage that Tesla has is that it doesn’t manage two systems,” he added. “They only have one.”