The United Auto Workers union couldn't come to a contract agreement with the Detroit Big Three automakers, which has led to strikes at several facilities and a potential disruption for the sector.
One analyst sees Tesla Inc
What Happened: The standoff between the UAW and the three automotive companies General Motors Company
Some, including Wedbush analyst Daniel Ives, have pointed out that Tesla could benefit the longer the strike continues, especially if the new contract includes details like higher wages for workers.
"Tesla and foreign auto makers the true winners in UAW strike debacle in the 313," Ives wrote in an updated note.
Ives, who has an Outperform rating and $350 price target on Tesla, said that the battle shows no signs of slowing down, with UAW President Shawn Fain ready to initiate more strikes at additional factory plants if a deal is not reached by Friday.
"This would be a major step-up in this growing battle between the UAW and GM/Ford/Stellantis. Our worry is this could be a long and nasty strike which would be an absolute debacle for the Detroit Three."
Ives said the current UAW deal on the table and the existing business models for the three Detroit automakers are "not sustainable" or profitable.
The analyst said this is a "very frustrating quagmire situation as Barra and Farley have done a great job transforming the stalwarts and ready for the EV transformation," referencing GM CEO Mary Barra and Ford CEO Jim Farley.
"The clear winner in this heavyweight boxing match between the UAW vs. GM/Ford is Musk and Tesla with champagne now on ice which sits in a non-union position."
Ives also sees non-union foreign automakers like Toyota Motor Corporation
What's Next: The analyst said a new pricing structure could come from GM, Ford and Stellantis with higher costs related to new UAW contracts.
"Let's be clear: this is a growing nightmare situation for GM and Ford as both 313 stalwarts are in the early stages of a massive EV transformation path for the next decade that will define future success," Ives said.
Ives added that it's a crucial period of execution for electric vehicles and "the timing could not be worse."
"On the other hand non-union Tesla does not face similar issues which speaks to the complexity both GM and Ford face going up against the EV leader Tesla, while trying to satisfy rising union demands."
Ives said a prolonged strike of four weeks or more could push the roadmap for electric vehicles at GM and Ford further out. The companies' electric vehicles could also see price increases in the coming year.
"Farley and Barra both face some tough decisions ahead and find themselves with their back against the wall as the options around facing a strike or accepting a MAJOR cost intake for the next decade."
Benzinga recently reported on General Motors President Mark Reuss writing that the company had made an offer to the UAW that included a 20% wage increase and other benefits.
Stellantis has also made an undisclosed offer to the UAW since strikes began, a source told the Detroit Free Press.
A new deadline of Friday, Sept. 22 at 12 p.m. ET was set by the UAW. If a deal, or progress, is not achieved by then, Fain said that strikes will expand.
