EV stocks to benefit from US Auto Strike?
πππ13,000 US Auto workers went on strike on Friday dealing a big blow to US Big 3 car makers Ford, GM and Stellantis. Members of United Auto Workers (UAW) began picketing at General Motors, Ford and Stellantis. It is the first time in UAW's 88 year history that it walked out on all 3 automakers simultaneously as 4 year contract with the companies expired on Thursday.
If the strikes last a long time, they could cause dealers to run short of vehicles and prices could rise. UAW demanded 36% wage increase over 4 years. However Ford, GM offered 20% and Stellantis, formerly known as Fiat Chrysler offered 17. 5%.
Tesla does not have union workers and incur labour costs of USD 45 to USD 50 per hour compared to the Big 3 US Automakers whose workers are paid USD 64 to USD 67 per hour on labour costs including benefits.
will certainly benefit from the strike. Tesla's share price jumped over 5% on Monday September 11, after Morgan Stanley's analyst said that Tesla's Dojo supercomputer could booost Tesla's market value. Morgan Stanley's Target Price is USD 400 from USD 250 previously. Tesla's share price is up 3% in the past 5 days and a massive 153% year todate.
Surprisingly $Faraday Future Intelligent Electric Inc.(FFIE)$
is up 8% today but down a huge 76% year todate. FFIE stock could be the next giant short squeeze as it carried a short interest of 23% on August 31, 2023. Faraday also recently initiated a 1 for 80 reverse stock split on August 28, bringing shares above Nasdaq minimum requirement threshold of USD 1.00.
Other EV stocks that could benefit from the strike would be $Rivian Automotive, Inc.(RIVN)$
Rivian's share price is up 39% year todate. Rivian has Amazon's backing. Rivian's focus is on electric "adventure" SUVs and pick ups.
The Chinese EV companies will also benefit from the strike. $NIO Inc.(NIO)$
Nio is up 8% year todate.
XPeng is up 79% year todate.
However Chinese EV companies are currently facing an European Union probe into China's subsidies for EV makers, amid concerns that the payments are negatively impacting European companies. According to the EU, global markets are now flooded with cheaper Chinese electric cars, and their price is kept artificially low by huge state subsidies.
Even though the current Auto strike is impacting the Big 3 Automakers in the US, the implications have far reaching consequences. In the short and mid term, there maybe shortage of vehicles but other Automakers like Tesla, Rivian and Chinese EV companies like Nio, XPeng, Li Auto and BYD will benefit.
Ultimately the issue over pay will be resolved and the strike will be over. Hopefully it will be soon for everyone as a long term strike will affect the economy too.
EVs are set to play a pivotal role towards a cleaner and greener environment and its demand will continue to rise exponentially in the future.
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