Elon Musk Says Auto Union’s Demands Would Bankrupt Big Three Carmakers

Elon Musk, the CEO of Tesla Inc., attacked the United Auto Workers on Tuesday, claiming that their demands will “drive GM, Ford, and Chrysler into bankruptcy in the fast lane.”

Elon Musk Says Auto Union’s Demands Would Bankrupt Big Three Carmakers

Earlier on Tuesday, President Joe Biden stopped by a picket line at a General Motors Co. facility in a suburb of Detroit and supported the UAW’s demand for a significant salary raise. The union is on strike in opposition to General Motors, Ford, and Stellantis NV, the company that makes Jeep, Chrysler, and Dodge models. The union, which has made the unusual decision to go on strike simultaneously against Detroit’s Big Three automakers, has lowered from 40% to 36% of its requests for salary increases in discussions.

There are no unions at Tesla or other manufacturers of all-electric cars, such as Lucid Group Inc. and Rivian Automotive Inc. For a sizable portion of total remuneration, they generally use employee stock purchase programs and restricted stock units. The UAW is concerned that EVs, which usually have fewer moving parts and employees needed to manufacture them, may eliminate employment for them and lower pay.

Musk is not the only person who believes that a significant victory for the UAW may spell trouble for Detroit’s manufacturers.

According to Patrick Kaser, portfolio manager at Brandywine Global, “If the UAW gets everything they are asking for, it will very clearly damage the competitive position of the Big Three companies materially.”

As Tesla struggled to increase production of the Model 3 vehicle, the UAW started organizing workers at the company’s Fremont, California, facility. Nothing is preventing the Tesla crew at our vehicle plant from voting union, Musk tweeted in 2018. could, if they choose, do so tomorrow. But why should I pay union dues and forfeit my stock options?

The union’s campaign at the Fremont factory was never successful enough to go to a vote. In 2021, a committee of US labor board members from both political parties determined that Tesla had frequently broken the law in Fremont, including by “coercively interrogating” union sympathizers and terminating one for his involvement. Tesla is appealing the decision and has refuted any misconduct.

At the company’s facility in Buffalo, New York, the union Workers United claimed in February that Tesla had fired scores of workers in retaliation for a union drive there.

Read more: Tesla Fires Dozens Following Unionization, Document Says

Despite the challenges, Catherine Fisk, a labor law professor at UC Berkeley, believes that big achievements for UAW employees at Detroit’s heritage automakers, coupled with strong public support for unions, may once again spur Tesla employees to organize.

According to US legislation, unionizing is quite challenging, Fisk claimed. “Having said that, despite much greater obstacles, employees managed to unionize in the 1930s. It’s merely a tedious procedure that has happened before and may happen again.

Tesla has the highest profit margins in the industry, and Musk has committed to prioritizing volume before profit. Even as Detroit manufacturers make the expensive transition from producing internal combustion engines to EVs, the EV manufacturer has reduced the price of its vehicles this year.

K. Venkatesh Prasad, senior vice president of studies and chief innovation officer at the Center for Automotive Research in Ann Arbor, Michigan, said in a phone interview: “If you are the Detroit Three, you have two operating systems.” “The transition to EVs, which won’t be profitable for a while, is being funded by the profits you make on ICE vehicles.”

He said, “Tesla’s main competitive advantage is that they don’t have to manage two systems. There is just one.

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