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Tesla could benefit from a possible UAW strike, a Wedbush analyst says. Ford, General Motors, and Stellantis are on the verge of a huge strike and production shutdown, while Tesla can safely continue to produce electric cars, saturating the market with them.

A looming strike by the United Auto Workers union, which represents hourly workers at three Detroit auto companies, could be great news for Tesla, says Wedbush analyst Dan Ives. The UAW spent the summer negotiating new contracts with Ford, General Motors, and Jeep owner Stellantis, according to Business Insider. The union demands “historic wage increases, elimination of a tier system implemented during the depths of the recession, cost of living adjustments, and more.” If an agreement is not reached by September 14, approximately 150,000 UAW workers across the United States will go on strike. The move could cost the industry $5 billion in 10 days.

This is all “a potential nightmare situation for GM and Ford,” Ives said in a note to clients. The supply threat will also inevitably reduce production and year-end inventories. This, in turn, will lead to fewer deals during the festive season.

Tesla CEO Elon Musk has long recognized the threat that labor unions pose. Therefore, Tesla employees are not union members. Musk offers an excellent compensation package to attract and encourage employees to work for Tesla. The company, which does not use union labor, could benefit from any work stoppages at competitors, Ives said. This could be particularly positive at a time when the industry is increasingly pushing electric vehicles.

“Tesla does not face similar issues which speaks to the complexity of both GM and Ford face going up against the EV leader Tesla, while trying to satisfy rising union demands,” Ives said. “If a strike happens then ultimately production and the EV roadmap could be pushed out into 2024 and delays would be on the horizon at this crucial period for GM, Ford, and Stellantis.”

Currently, Ford and GM have set ambitious EV production goals for the next few years. They sought to compete with Tesla and dreamed of overthrowing it from its pedestal. But production slowdowns due to the shutdown, combined with potentially significant increases in labor costs, could stall the race to beat Tesla in the electric vehicle market, Ives said.

At this point, Tesla is already enjoying a successful year. Production and delivery indicators are high and close to targets. Deliveries of the highly anticipated Cybertruck are expected to begin soon, adding to this success.

“Farley and Barra both face some tough decisions ahead,” he said. “The options around facing a strike OR accepting a major cost intake for the next decade is a dynamic the Street will be closely watching over the next week.”

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