UAW And Detroit Automakers Locked In Discussions Over EV Battery Plant, Wages, Unionization

The United Auto Workers (UAW) union and the three major Detroit automakers — General Motors Co. GM, Ford Motor Co. F and Stellantis N.V. STLA — are at loggerheads concerning wage and union representation issues at upcoming electric vehicle battery factories. This dispute is influenced significantly by Tesla Inc. TSLA and its Chinese counterparts.

What Happened: A Reuters report this week revealed UAW President Shawn Fain is pressing representatives from the three Detroit automakers to allow UAW to unionize future battery plant employees. He is also advocating for a rise in wages at their respective joint-venture battery factories, aligning them with the pay of assembly workers.

The UAW and negotiators from the Detroit Three are mulling over several options, including moving workers from UAW-affected factories to new battery plants.

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Fain is actively advocating for a bigger portion of the expected U.S. government subsidies for battery cell manufacturing, estimated at $35 per kilowatt-hour, as part of President Joe Biden’s Inflation Reduction Act (IRA).

Car manufacturers view these IRA subsidies as crucial for offsetting the substantial investments made in new factories, establishing domestic battery supply chains and advancing vehicle development, all of which are essential to comply with regulatory mandates aimed at reducing carbon emissions.

Detroit automakers have several primary concerns, including facing competition from Tesla and other battery manufacturers with more flexible labor practices and lower labor expenses. They are also wary of potential market infiltration by Chinese battery producers like CATL, who operate with considerably lower costs.

Late on Wednesday, Ford Motor announced another round of layoffs in Michigan, affecting an additional 150 workers, as a consequence of the ongoing strike led by the UAW, bringing the total number of workers on furlough to 2,730.

Ford attributed these new layoffs to the UAWs’ strike that began last week at its Kentucky Truck Plant, which subsequently impacted operations at a Michigan axle plant.

Shares of Ford Motor fell 2% Thursday, falling to the lowest level since end-May 2023. General Motors and Stellantis also fell 0.8% and 4.2%, respectively, while Tesla Inc. tumbled 10% after reporting its third-quarter earnings yesterday.

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