While the UAW strike rages on at Ford, GM, and Stellantis, here's what Tesla stock is doing
There are no striking UAW workers demanding significant pay hikes out front of Tesla's (TSLA) Gigafactories.
And investors appear to be appreciating what that could mean for Tesla's profits.
Tesla stock is up over 7% since the beginning of September, outperforming a 4% rise in Ford (F) and a 1.3% gain for General Motors (GM). The relative outperformance of Tesla's stock versus the big two Detroit names has begun to widen since the UAW strike went into effect four days ago.
Tesla famously doesn't have a unionized workforce, the opposite of its legacy auto-making rivals who are now dealing with a potential catastrophe.
Wedbush analyst and Tesla bull Dan Ives thinks the legacy players will face years of mounting costs due to pressure from the UAW and as a result, weak profits.
"The big issue for GM and Ford as well as investors is around if anywhere near a ~40% wage increase gets approved/agreed this will be a major headwind on the cost front and ultimately in some way be passed down to the consumer and thru EV prices," Ives added. "The costs of EV vehicles out of Detroit is a major advantage going after mass adoption with any $3k, $5k, $7k, etc. added to the slew of vehicles coming out would results in demand churn in our opinion."
In other words, it would be fertile ground for Tesla to wrestle away market share with its entry-level Model 3 and other offerings.
With no end in sight to the UAW's calculated strikes at Ford, General Motors, and Stellantis (STLA) amid a push for a 40% pay hike, Wall Street thinks the financial impact to all three is mounting.
Citigroup analyst Itay Michaeli estimates a strike at GM's Wentzville assembly plant through September will zap operating profits this year by $140 million. The analyst sees a similar financial impact on the striking Ford assembly plant in Michigan.
The costs for each could surge if the UAW — under the leadership of vocal auto critic Shawn Fain — widens its strike to more plants. Doing so runs the risk of stunting sales while fixed costs remain bloated, a powerful combination that could aggressively eat through the cash positions of Detroit's Big Three.
"No one wins in a strike, particularly if it's prolonged," former Chrysler CEO Bob Nardelli told Yahoo Finance Live (video above). "You never make up the wages that you lost. You never make up the customers that you may have lost. And the impact could be devastating."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
