Treasury Secretary Janet Yellen said she hopes the United Auto Workers (UAW) union and the Big Three automakers can establish an agreement that's a win-win.
But as the strike enters its fifth day, and with the possibility of a prolonged labor dispute, there might be one winner: Tesla Motors billionaire CEO Elon Musk.
The Detroit Three—Ford, General Motors, and Stellantis—have been aiming to challenge Mr. Musk and eat into his share of the electric vehicle marketplace.
President Joe Biden and his administration, as part of a green energy push, have also been issuing new emissions rules and showering the private sector with lavish subsidies to encourage greater electric automobile production.
But the UAW's work stoppage could throw a wrench into these efforts and possibly force the automaker giants to continue to lag behind Tesla, which is the only major U.S. automaker without a union.
Market analysts have said that even a settlement will be a victory for Mr. Musk because UAW's securing a generous compensation package would significantly widen the gap in labor costs between the Big Three and Tesla's non-union facilities.
Labor CostsBefore the targeted strikes, Ford compared its labor costs with those of some of its competitors, including Tesla.
"They could double our wages and not raise the price of the vehicles and still make billions in profits. It's a choice. And the fact that they want to compare it to how pitiful Tesla pays their workers and other companies pay their workers, that's what this whole argument's about," Mr. Fain said.
Even if Ford, GM, and Stellantis met Mr. Fain halfway on the organization’s demands, Tesla would still maintain its tremendous cost advantage in electric car manufacturing.
This year, Mr. Musk has been building on Tesla's cost savings by planning to slash manufacturing expenses by 50 percent, which experts assert will depend on advanced automation or tremendous feats of engineering.
In addition, the way Tesla and the Detroit Three employees are compensated differs. Tesla workers receive stock options that are not a direct cost to the company. UAW employees get profit-sharing bonuses.
Despite some turbulence last year amid Mr. Musk's purchase of X, then known as Twitter, and concerns about Tesla's balance sheet, the stock has skyrocketed in 2023.
Year-to-date, Tesla shares are up about 140 percent. Over the past five years, the electric car titan has spiked by 1,200 percent.
UAW initially requested a four-year contract that includes a 40 percent pay raise, a 32-hour work week with 40-hour pay, and the restoration of traditional pensions and a cost-of-living adjustment.
Companies have presented counterproposals. Stellantis, for example, recently offered a 21 percent pay hike, which Mr. Fain said was a “no-go.”
Mr. Fain has revised the UAW’s pay hike request to a mid-30 percent wage increase.
“Things are moving, but they’re moving very slow, and we’ve got a long way to go,” Mr. Fain said at a digital rally on Sept. 17.
In July, Ford confirmed that it would lower its EV target and warned of growing losses amid slower-than-expected adoption.
The automaker estimates it will build electric cars at a rate of 600,000 per year sometime in 2024, compared with a previous forecast of reaching that rate by the end of 2023.
It also anticipates recording an operating loss of roughly $4.5 billion this year.
According to Ford CEO Jim Farley, UAW's demands would bankrupt the company.
Elon Musk Versus UAWIn 2022, Mr. Musk, a vocal union opponent, dared the UAW to organize a union at his company.
The issues between Tesla and unions date back to 2017, when a Tesla Fremont Factory employee contacted UAW and complained of long hours, low pay, and high injury rates.
In 2018, the billionaire CEO posted: "Nothing stopping Tesla team at our car plant from voting union. Could do so [tomorrow] if they wanted. But why pay union dues [and] give up stock options for nothing? Our safety record is 2X better than when plant was UAW [and] everybody already gets healthcare."
The National Labor Relations Board ordered Mr. Musk to remove the post after concluding he and the company participated in illegal conduct against U.S. employees attempting to organize a union.
"Tesla and SpaceX factories have a great vibe. We encourage playing music and having some fun. Very important for people to look forward to coming to work!" Mr. Musk wrote.
"Quite a few of our factory techs who work on the line have become millionaires over the years from company stock grants."
Mr. Fain said that auto workers "are scraping by" so that "greedy CEOs and greedy people like Elon Musk can build more rocket ships and shoot their self into outer space."
"Workers in this country have got to decide if they want a better life for themselves, instead of scraping to get by paycheck to paycheck, while everybody else walks away with the loot," he added.