Beege touched on this yesterday but I wanted to highlight it a bit more. As of today, the UAW has announced what they’re calling a standing strike, meaning they are just striking in three factories.

Since no deal was reached before the 11:59 pm ET deadline Thursday in contract negotiations with the Big Three automakers, the United Auto Workers union launched a targeted “stand up” strike at just three auto plants initially.

For UAW members at all other plants, however, they will continue to go to work unless and until they, too, are called to strike. But they now will be working without a contract.

CNN has published a story saying a big winner of the strike is Tesla. Tesla is not a union shop which means it is in no danger of a strike or of being forced to have to pay workers 40% more for the same job. But beyond that, almost everything CNN reports here is wrong:

Tesla faces growing electric vehicle competition, and rival automakers are challenging its position as the EV market leader. Tesla gained the crown by beating competitors to market by literally years. But industry analysts believed Tesla would ultimately be bested by legacy automakers that could make much cheaper EVs.

However, Detroit’s cost advantage could erode if it makes significant concessions to the United Autoworkers Union, said Dan Ives, analyst at Wedbush Securities. And a prolonged strike could delay the timing of GM, Ford and Stellantis’ EVs coming to market.

“A strike lasting longer than 4 weeks would be a body blow to the EV ambitions of GM and Ford in [the first half of 2024] and delay many aspects of this initial important EV push,” Ives said. “The clear winner in this Game of Thrones Battle between the UAW vs. GM/Ford is Tesla, which sits in a nonunion position.”…

“Lets be clear: This is a potential nightmare situation for GM and Ford,” Ives added.

The reality is that “analysts” have been saying for years that the competition was coming to eat Tesla’s lunch but the reality is that most non-Tesla EVs aren’t selling that well. As for the idea that the rival automakers have a cost advantage over Tesla, that is a complete fantasy. At least when it comes to GM and Ford, they are having to build up their EV lines from scratch at a cost of billions of dollars. Ford has been pretty transparent about the fact that even with the few EV models that are selling, they are losing a lot of money on every car sold.

The recent release of Ford’s second-quarter financial results for 2023 provided fresh information about the company’s electrification plan, the costs associated with it and the company’s updated long-term plans.

The most striking figure is that of the net loss per electric vehicle sale. As calculated by Carscoops, Ford loses $32,000 USD on every EV it sells. Model e, Ford’s new electric division, lost $1.8 billion in the second quarter of 2023, on sales of just 34,000 electric and plug-in hybrid models. It had forecast that it would lose $3 billion this year, but now believes losses will hit $4.5 billion.

Ford is losing an amount of money equal to the cost of a new Tesla Model Y every time they sell one of their own electric Model Es. Maybe you think things are better at GM? They’re not. GMs EV best seller, the Chevy Bolt, has also been a money loser:

When the Chevy Bolt was released in 2017, UBS reported that GM was losing $7,400 for every unit that was sold. As per the report, GM was making a loss because it hadn’t yet ramped up the production of the Chevy Bolt to reduce the cost. Of course, GM was also willing to lose money to make the Chevy Bolt one of the cheapest EVs on the market.

Six years after the Chevy Bolt was introduced, GM is yet to increase its Chevy Bolt production significantly to make a profit. However, according to its latest earning call, the company expects to record “low to mid-single digits” profits in its EV portfolio by 2025.

Clearly the numbers remained bad because GM canceled the bolt, though I think CEO Mary Barra just recently reversed that decision.

So the idea that Detroit is in danger of losing their cost advantage is just a pure fantasy. They have no cost advantage to lose. They haven’t yet been able to produce much of anything in the EV sector that isn’t losing them money with every sale. Meanwhile, Tesla continues to make a solid profit on every car. In fact, when it comes to profit, Tesla is outperforming the most successful car manufacturers on the planet.

Tesla earned eight times as much profit per vehicle as Toyota Motor in the July-September quarter despite being outsold more than 7 to 1, a Nikkei analysis shows, putting the American electric-vehicle maker ahead in quarterly net profit for the first time since going public in 2010.

That’s the starting point here and now the UAW is striking to demand a 40% wage increase. If you’re Tesla, this is terrific news because it means the competition is about to fall even further behind.

It also creates a real pickle for President Biden who is simultaneously trying to side with the unions and also trying to make “Bidenomics” his reelection theme.

President Joe Biden was dealt an economic and political blow Friday as the United Auto Workers went on strike after the union and major American automakers failed to reach a new contract, a development the White House worked to avoid and now places the president in a bind.

On one side, Biden faces pressure to support workers he has championed for decades and whose support he’ll need to win reelection. On the other is the potentially destabilizing risk of an auto manufacturing shutdown, threatening higher prices on vehicles and a blow to the economy just as Biden ramps up his “Bidenomics” sales pitch.

It’s a problem for Biden in another, more specific way too.

For Biden, who has labeled himself the most “pro-union president in history,” the strike also lays bare a tension between two of his chief objectives: Improving wages and conditions for American manufacturing workers and leading a transition to clean energy.

The president has insisted repeatedly those can be parallel goals, not competing ones. But the launch of the strike makes clear that reconciling those intentions will still be a complex challenge.

One of the demands the UAW is making is that workers making EV components have to be paid the same as everyone else:

The union, under its new president, Shawn Fain, wants workers who make electric vehicle components like batteries to benefit from the better pay and labor standards that the roughly 150,000 U.A.W. members enjoy at the three automakers. Most battery plants are not unionized.

The Detroit automakers counter that these workers are typically employed in joint ventures with foreign manufacturers that the U.S. automakers don’t wholly control. The companies say that even if they could raise wages for battery workers to the rate set under their national U.A.W. contract, doing so could make them uncompetitive with nonunion rivals, like Tesla…

At the heart of the debate is whether the shift to electric vehicles, which have fewer parts and generally require less labor to assemble than gas-powered cars, will accelerate the decline of unionized work in the industry.

Tesla is the clear leader in the EV space and yet it is a non-union shop. That means the future which team Biden envisions, a world full of EV cars and high paying union jobs, seems like a fantasy. You can have a successful EV car company or you can have high paying union jobs, but as of now there’s no evidence you can have both.