Tesla Prepares To Get Profits From Strike UAW

Automotive work union strike (UAW). (Photo: Twiiter/@SWA_solidarity)

JAKARTA - The strike by the United Auto Workers (UAW) against three major American automotive manufacturers continues, with thousands of workers protesting for an increase in salaries.

Despite the 13,000 workers on strike, General Motors, Ford, and Stellantis still refused to give in to union demands despite the support of influential figures including US President Joe Biden. However, it appears that one of America's automotive manufacturers will benefit from this strike, Automotive News reported, quoted from Carbuzz, October 1.

Analysts have stated that Tesla will benefit from the ongoing strike.

"In our view, Tesla is the biggest winner. Their labor costs are estimated to be 35% - 40% lower than the Detroit Three, and this cost advantage will widen as the deal is finally reached,"▁semestinya Nelson, Vice President of Equity Research at CFRA, told BNN Bloomberg.

Currently, automotive manufacturers are offering a 21% increase in salaries, but Nelson said that unions are asking for an overall increase of around 36%. This will make it more expensive for major American automotive manufacturers to switch to electric vehicles.

Tesla already has a 60% share of the American electric vehicle market during the first three quarters of this year, as reported by Kelly Blue Book.

"In our view, this strike will really hamper Detroit Three's ability to compete in the electric vehicle market, just because of the much higher labor costs," Nelson added.

Don't forget that Tesla has lowered the price of its electric vehicle, making it more attractive to customers. For example, the new Model 3 can be owned at a price of only $33,000, or around IDR 511 million after incentives. That is a tremendous price for electric vehicles and it is very difficult for all three to match.

Tesla CEO Elon Musk has said that he is willing to sacrifice profits to achieve a sales growth target of 50%.

Meanwhile, Gene Munster, managing partner at Deepwater Asset Management, believes that once the unions and the Big Three reach an agreement, Tesla's labor costs will be 48% lower than other American competitors. Tesla's average workforce costs are estimated at around 55 US dollars per hour (around Rp. 852 thousand), while the cost of UAW workers could increase to 105 US dollars per hour (around Rp. 1.6 million).

Tesla workers are not part of the union, but there has been an attempt by employees to launch a union project. However, none of them succeeded as the workers involved were fired immediately after announcing their intention to form a union.