On Friday, the United Auto Workers union announced it is expanding its strike against General Motors (NYSE: GM) and Stellantis (NYSE: STLA) while significant progress has been made in negotiations with Ford Motor (NYSE: F).
While some fears eased no additional factories will be added besides the three assembly facilities that are already on strike, which are Ford truck plant in Wayne, Michigan, GM plant in Wentzville, Missouri and the Stellantis in Toledo, the deepening of the strikes is aiming at hurting dealerships of GM and Stellantis.
The Deepening Of The Strike
All 38 parts distributions centers across 20 states at General Motors and Stellantis joined the strike. Without new parts being sent to service centers for repairs, this action could quickly cripple dealership's ability to do repairs which is the most profitable part of their business. Without this revenue source, dealerships could themselves start pressuring GM and Stellantis to make adhere to the demands of their workers, like Ford has, from everything from eliminating wage tiers to job security.
The Deepening Of The Strike Is Good News For Tesla
The deepening of the strike is bringing in additional 5,625 UAW members who are working at the newly targeted facilities, bringing the total of UAW members who will be on strike to over 18,300 from coast to coast.
While bringing numerous challenges to the Detroit's Big Three automakers, the unprecedented strike could also strengthen the leadership of the EV king, Tesla Inc (NASDAQ: TSLA) as both the strike itself as well as the potential adherence to UAW's demands of a 40% increase can only further widen the gap that Tesla rivals have been fiercely trying to bridge in an effort to catch up to the EV king.
While Ford dodged a bullet last week, all those needing automotive parts didn't. However, a tonneau cover maker Worksport Ltd (NASDAQ: WKSP) provided a rare piece of good news last week as it showed it is advancing towards the launch of SOLIS solar-powered tonneau cover and remote battery system COR that hold a great promise for the future of electric pickups, extending their range and upgrading the off-roading experience.
Worksport Revealed A Lucrative Agreement
While GM, Stellantis and Ford dealt with an unprecedented strike last week, Worksport reported it made along-term supply agreement with an automotive aftermarket reseller for its advanced hard-folding and soft-folding covers that have that come with solar charging capabilities for electric pickup trucks.
The deal has the potential to bring Worksport $16 million in annual sales, after it already reported an order of $1.6 million for its hard-folding covers and an additional $720,000 order for the soft-folding covers from the same customer. Worksport will be incorporating robotics and automation to uplevel operations at its U.S. facility, expanding its assembly lines from one to four as it works on developing the highly anticipated SOLIS solar cover and remote battery system COR. This green power duo position Worksport to be at the forefront of automotive green energy era.
Cost Was Already A Major Competitive Advantage For Tesla
Even before the strike, cost was a limiting factor for General Motors, Stellantis and Ford on their electrification turnaround. The strike itself is resulting in costs that are further weakening their chances of success and adhering to UAW's terms can go as far as making their business models unsustainable and unprofitable. This is why innovative players such as Worksport who specializes in providing affordable cleantech solutions to the automotive sectors can play an important role in the distribution of power because their offerings can be the helping hand that these automakers need to stay in the EV race.
UAW Is Not Backing Down
UAW is demanding demanding an immediate 20% raise for its members and a total of 40% in wage hikes during the four-year life of the contract. It is also determined to retrieve several concessions it gave up back in 2007 and 2009 when Ford was cash-stripped and GM and Chrysler were near bankruptcy and federal bailouts, such as pension plans and retiree healthcare for workers hired since 2007 as these are only available to senior employees. For now, Detroit automakers only offered about 20% raises during the life of the contract, including immediate raises of 10%.
Tesla And Foreign Automakers Could Be In For A Long-Term Advantage
As Wedbush analysts noted, losses from the strike could also cause Ford, GM, and Stellantis to increase the prices of the EV, which would imply admitting ultimate defeat considering that Tesla began this years with discounting its EVs. Toyota Motor (NYSE: TM) could also gain from the long-term consequence of this strike that is likely to last as it has a nonunionized workforce.
On Friday, Nikkei newspaper reported that Toyota will be speeding up its EV production of both Toyota and Lexus brands to reach annual output of more than 600,000 vehicles in 2025. Last year, Toyota sold less than 25,000 battery-powered vehicles across the globe, including its Lexus brand. Toyota has only previously stated it is aiming for sales of 1.5 million EVs annually by 2026 and 3.5 million by the end of the decade, which is about one-third of present global volume. According to Nikkei, Toyota is targeting this year's EV production to about 150,000 vehicles, elevating the figure to 190,000 next year.
A Massive Power Shift Is Upon The Automotive Industry
All in all, the automotive industry is in for a big shift. The EV revolution itself is shifting the power, with EVs being more about software than hardware and that means less parts and less labor. The Big Three cannot get out of it unharmed and their EV rivals will use that to their advantage.
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