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Levy, in a conversation with CNBC’s “The Exchange”, projected that Tesla’s labor costs would likely increase in response to a potential pay hike for workers at Ford, GM, and Stellantis. These companies already pay their hourly workers more than Tesla. If the UAW’s demands for higher pay are met, the pay gap between these companies and Tesla will widen further. Tesla might then have to increase its workers’ wages to mitigate the risk of unionization.
Levy added that the anticipated increase in labor costs would not only affect Tesla but also other trans plant original equipment manufacturers (OEMs). He noted that unionization efforts by the UAW have been challenging in the past, partly because Tesla has compensated its employees with stock options. With Tesla’s current stock performance, future stock compensation benefits may not be as attractive, leading Barclays to believe that wages for Tesla employees are set to rise.
This forecast comes amid recent comments from Tesla CEO Elon Musk suggesting that the UAW’s demands could steer Detroit’s Big Three towards bankruptcy. It remains unclear whether Musk believes a similar wage increase for Tesla employees would have comparable effects on his company.
Tesla stands out as the only major American automaker not represented by a union in the US. Musk’s opposition to unionized labor in relation to Tesla is well known. Efforts by the United Auto Workers and Workers United trade unions to unionize Tesla’s workers in California and New York have been consistently resisted by Musk.
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