How a strike imperils Detroit’s drive to EVs

By David Ferris | 09/14/2023 06:55 AM EDT

Walkouts could begin this week unless major automakers reach a deal with workers to avoid a slowdown in production.

United Auto Workers President Shawn Fain walks in the Labor Day parade in Detroit.

United Auto Workers President Shawn Fain, middle, walks in a Labor Day parade in Detroit earlier this month. Paul Sancya/AP Photo

An imminent strike by the United Auto Workers against Detroit’s automakers could determine whether the electric vehicles that Americans buy in coming years will come from the traditional and homegrown auto industry or from the startups and foreign brands that seek to unseat them.

The reason, analysts say, is that several outcomes — a strike or a deal for higher worker wages or both — could force America’s legacy carmakers into tough choices that other nonunionized auto producers don’t have to make. In other words, the UAW negotiations could sway which companies win or lose from a shift away from fossil fuels.

The tension between affordable EVs and good wages for union workers is at the heart of a dilemma for President Joe Biden, who is an ardent supporter of both. Biden is in a treacherous spot of supporting EVs as part of his broader climate agenda while counting on union voters in battleground states like Michigan to give him a second term in 2024.


Ford Motor Co., General Motors Co. and Chrysler parent Stellantis NV have until midnight Thursday to find common ground with the UAW on higher wages and other benefits — or face the possibility of walkouts by some or all of their 146,000 union workers.

Experts believe a strike is likely. The UAW and the three big U.S. automakers remain far apart on the contours of labor contracts, and UAW President Shawn Fain has dismissed the companies’ offers as inadequate. Underlying worker anxiety: EVs are simpler machines that require fewer hands to build than gasoline-powered vehicles.

If factory lines fall idle or if labor costs go too high relative to competitors, traditional U.S. automakers could be forced to delay their offerings or raise prices on their EVs. That, in turn, could create openings for Asian and European competitors or for EV-only makers like Tesla Inc. and Rivian Automotive Inc., to grab customers away.

“This is a critical moment,” said J.R. DeShazo, who has studied the role of labor in the EV transition and is the dean of the Lyndon B. Johnson School of Public Affairs of the University of Texas, Austin.

Automakers are “all trying to figure out how to change the menu they offer consumers,” he said. For the unionized automakers, “this strike has the potential to significantly slow the expansion of electric vehicles and that menu.”

The UAW has demanded raises of up to 40 percent, shorter hours and the reversal of concessions that they made during the Great Recession of 2008 and 2009, when several automakers were on the brink of bankruptcy. Supporters of autoworkers say satisfied employees are likely more motivated and productive — and are crucial to making vehicles.

“The cost of a strike might be high, but the cost of not striking is higher,” is how Fain, the UAW president, puts it.

The UAW points to the large profits and big executive compensation packages major U.S. automakers have compiled in recent years.

According to a study by the nonprofit Economic Policy Institute, the big three automakers have posted cumulative profits of $250 billion in the last decade, while executive pay grew by 40 percent. The UAW wants those profits to be shared with workers. With skilled workers in high demand, the union is in a strong bargaining position.

“It’s important to remember that a just transition requires more than a fuel source replacement,” said J. Mijin Cha, an assistant professor of environmental studies at the University of California, Santa Cruz, who studies labor issues. “An EV transition that leaves workers behind is not a just transition.”

It is unclear, however, whether simpler vehicle assembly will necessarily lead to shrinking job rolls at the UAW. As automakers have turned to EVs, they have also brought key components in-house that previously would have been made by suppliers.

“There’s going to be a need to build other components, like batteries and electric motors and power electronics,” said Sam Abuelsamid, an auto analyst at the consultancy Guidehouse Insights. “There will be job opportunities for the union.”

Any strike is unlikely to have an immediate impact on the availability of electric models from traditional American automakers. That’s because their dealers currently have a thick backlog of EVs, as such vehicles cost more than most buyers can afford.

“The least impacted thing during a strike would be EVs, at least in the short term,” said Karl Brauer, an analyst for the auto-selling website

Ford and GM in the crosshairs

Today’s labor unrest and the future of EVs are tightly linked for the two automakers most at risk, Ford and GM.

Both are in the middle of expensive and complex rollouts of electric vehicles. Stellantis, which is still a year away from bringing a U.S. EV to market, has a bigger time cushion.

On Wednesday, Ford CEO Jim Farley said in a statement that the company “put 100% of our energy into reaching an agreement with the UAW that rewards our valued employees and allows the company to invest in the future. If there is a strike, it’s not because Ford didn’t make a great offer.”

“The future of our industry is at stake. Let’s do everything we can to avert a disastrous outcome,” he added.

For Ford and GM, “In this crucial period of EV execution, model roll-outs, distribution, marketing, with EV competition rising across the board the timing could not be worse,” said Dan Ives, an analyst for Wedbush Securities, in a note to investors Monday.

There is both short-term and long-term risk for Detroit automakers.

In the short term, GM’s vulnerability includes the multiple mass-market EVs it will start dribbling out this fall before a full-scale push in 2024. Its Chevrolet brand is introducing the Silverado pickup truck and two SUVs, the Blazer and the Equinox — all electric versions of well-known vehicles that are intended for wide distribution.

Meanwhile, Ford just finished retooling its vast Rouge manufacturing complex in Michigan to triple production of the electric F-150 Lightning pickup truck.

In a note to investors Wednesday, the financial firm Moody’s said each of the automakers could lose up to $5.4 billion in the case of a six-week strike. That is the length — and cost — of the last time the UAW struck against GM, which was in 2019. “It will slow the companies’ efforts to ramp-up battery electric vehicle manufacturing,” the note said.

These rollouts are the culmination of years of planning and billions of dollars in investment. Both automakers are intensely focused on working out kinks in the system, and strikes at this time could delay the rollout of these vehicles, said Brauer of

A strike’s EV consequences could hinge on how the UAW carries out its plans.

Late Wednesday, the UAW’s Fain said if no agreements were reached, the union starting Friday would carry out a new kind of labor action he called a “stand up strike.” At first, it would target a small number of union locals tied to particular factories and then expand to others if the union’s demands aren’t met.

‘We’re going to hit where we need to hit,” he said in an address on Facebook Live. “We will keep the companies guessing.”

The auto union could call a general strike against all three automakers and all their factories simultaneously, but analysts consider that unlikely. Doing so would deplete the strike fund that the UAW has salted away from member dues in order to keep workers afloat during a strike.

The UAW could strike at one automaker but not another. It could also selectively strike either final assembly plants or those that supply parts. The effect on EVs depends on which specific plants shut down.

Two high-profile EV pickups, the Ford F-150 and the Chevy Silverado, are built in Michigan, and those plants could be subject to strikes. Other prominent electric EVs — Ford’s Mustang Mach-E and GM’s Blazer and Equinox — are built in Mexico, which falls outside UAW’s authority. But stoppages at facilities that make parts in the United States could still cause Mexican production to grind to a halt.

Labor and tomorrow’s EV

Longer-term risks exist for all three automakers, including Stellantis.

An extended shutdown could sap the companies’ ability to sell vehicles of all stripes, including EVs. While Fords, Chryslers and Chevys are unavailable, Brauer pointed out, “you can still buy Hondas and Toyotas and Hyundais and Volkswagens” — all foreign automakers that make vehicles in the United States without union labor and are aiming to produce EVs in significant volumes.

When it comes to EVs, the obvious alternative is Texas-based Tesla, which is also not unionized and has sold nearly six in 10 of all new electric vehicles sold in the U.S. so far this year.

A prolonged strike “could cause markets share shifts away from domestics that persist after the strikes are resolved,” Brauer said, speaking of the big three’s foreign competitors.

And a long strike, even at a non-EV plant, could hamstring EVs by constraining the automakers’ ability to sell its profitable, traditional SUVs and trucks.

“They are relying heavily on cash flow and profit from selling trucks and SUVs today to fund those [EV] plants,” said Guidehouse’s Abuelsamid.

And if a strike results in wage concessions that are too high — that don’t just trim automaker’s profits but cause automaking to be fundamentally more expensive at major U.S. automakers than at their competitors — it could be difficult for Ford, GM or Stellantis to match the prices of an EV from Tesla, Hyundai or Volkswagen in the years ahead.

“It’s hard to find affordable EVs today,” Abuelsamid said. “If labor costs go up significantly, that makes it harder.”

Fain said he is looking beyond issues like the prospects for EVs and to better standards for workers, whether they work for the UAW or beyond it. “If we don’t secure this work and we don’t secure it at a living standard, at big three standards, it’s not going to be a good future for anyone,” he said in comments recorded by NPR.

DeShazo, the professor at the University of Texas, said the UAW should keep in mind that as the EV transition unfolds and competition intensifies, it can’t presume their employers will continue to be profitable enterprises that can keep all their current workers employed.

“If [the union] asks for too much and they get it, the automakers may find themselves at a disadvantaged position in the next 10 years,” he said. “It may come back to haunt labor that they got such a good deal.”