US Right brings anti-EV narrative into UAW dispute

Impending industrial action by the United Auto Workers (UAW) union threatens to do either short-term or long-term damage to the EV ambitions of the ‘Detroit Three’ automakers, GM, Ford, and the US arm of Stellantis. But some on the right of the country’s political spectrum are trying to make the dispute a proxy for a pivot away from progress on EVs more generally.

Former Republican president, and front runner to secure the party’s 2024 presidential election nomination, Donald Trump wrote on his Truth Social platform that the UAW should not allow “all electric cars” on the grounds that “they will all be made in China and the auto industry in America will cease to exist”.

His two posts, which implied that incumbent president Joe Biden had somehow mandated a ban on the manufacture and sale of anything but BEVs and that the UAW should refuse to make any, appear now to have been deleted, although you can read them in various media. Which is perhaps unsurprising given they betrayed a total lack of understanding of the current US automotive landscape.

But while many of us outside the US may find the appeal of Trump mystifying, it cannot be denied that — assuming legal problems do not permanently derail him — he has a realistic shot of being US president again in 2025. So any anti-EV views, assuming he maintains an interest in the subject, could then be highly relevant.

It may just be short-term politicking. Michigan, the US automotive heartland, is a swing state. And UAW president Shawn Fain has pointedly refused to say if his union will give Biden an endorsement for 2024, as it tries to leverage political support in its dispute with the Detroit Three.

OEM challenge

But an anti-EV president in the White House could be an additional headache for US OEMs plotting their e-mobility strategies. The UAW’s threat to strike if a long laundry list of demands is not met is another.

Ford has potentially blinked first, announcing on Thursday pay rises for 8,000 UAW workers that it says will average more than $10,000/yr. But the UAW has a raft of demands, not just double-digit pay rises, but shorter hours, better pension and medical benefits, the restoration of cost-of-living adjustments and various other measures around the rights of temporary workers and caps on them, and protection from and right to strike against plant closures.

The UAW’s position is that its members need to share in strong profits from the three firms. It also stresses that it is not against the transition to electrification, but again only if its members are safeguarded in such a switch.

Just last week the union welcomed the Department of Energy’s announcement of a $15.5bn funding package for factory retooling for EV production. “The UAW supports and is ready for the transition to a clean auto industry,” it says.

“But the EV transition must be a just transition that ensures auto workers have a place in the new economy. Today’s announcement from the Department of Energy echoes the UAW’s call for strong labour standards tied to all taxpayer funding that goes to auto and manufacturing companies.”

The union has previously been critical of OEMs taking government cash for projects that do not benefit its members. For example, the UAW in late June voiced displeasure with the support offered to Ford’s joint venture with South Korean battery manufacturer SK On to establish three new advanced battery manufacturing facilities in Kentucky and Tennessee, which are now under construction.

“Ford is currently investing billions of dollars in companies that are not Ford and in a workforce that is not the UAW. And they are receiving billions of dollars in taxpayer funding to support this race to the bottom,” it complains. The firm “is planning to move some of our powertrain work to dangerous, low-paying, non-union battery jobs outside of Ford”, the union further warns.

Horns of a dilemma

The problem for the three OEMs is that the UAW demands are “a long list of stuff that is just beyond the pale in terms of any auto company’s ability to meet”, according to Steve Rattner, CEO of Willett Advisors, which invests businessman Michael Bloomberg’s personal and philanthropic assets. “The view on the Street is that there is no good option — with enduring a crippling strike or inking painful labour wage concessions as the two options on the table,” says automotive analyst and journalist Clark Shultz.

If the Detroit Three only made EVs, the choice might actually be a relatively simple one. Ilaria Mazzocco, senior fellow at the Center for Strategic and International Studies, set out well the economic challenge for US OEMs making EVs in North America in testimony before the US-China Economic and Security Review Commission last month.

“The challenge posed to the US by growing Chinese EV exports primarily pertains to cost,” she says. “Vehicles made in China are affordable and of increasing quality, making them attractive to consumers worldwide. The cost of these vehicles could undermine production efforts underway in the US and elsewhere, as well as incumbent automotive companies.”

Signing up to many of the UAW’s demands could fatally undermine any future ambitions of the Detroit Three to manufacture and market profitable EVs in the mass-market segment. And currently they make and sell relatively few EVs, either at negligible profit or a loss.

So, from an EV-only perspective, it would make sense for all three firms to reject the UAW’s demands and ride out a strike, on the grounds that their longer-term competitive positions in the EV market are more important than short-term interruptions to making cars they are not exactly that wild about selling anyway.

But, of course, none of the three are EV pure plays, and indeed the profits that have attracted such attention from UAW members and leadership are coming almost entirely from their ICE businesses. A prolonged shutdown that exhausts inventory and prevents them from selling their highest volume ICE vehicles will hurt the bottom line.

A smart negotiating position for Ford, GM and Stellantis might be to make this distinction — in effect, embrace the UAW’s own argument. They could make whatever concessions they calculate they could afford for ICE workers, on the grounds that the profits the UAW is targeting are made there.

But they could argue to ringfence EV manufacturing, where little or no profit is made, from the terms of the deal and try to avoid a rise in input costs that could cripple their ability to compete in the EV space of the future.