The labor dispute brought by the U.A.W. against Ford, General Motors, and Stellantis goes beyond wage negotiations and workplace conditions. The discomfort mirrors the seismic technological advances in automotive manufacturing driven by Elon Musk and Tesla’s superior E.V. technology.
Since Tesla’s Model S rocked the stage eleven years ago, legacy automakers have been in a frantic scramble, now at a do-or-die juncture—innovate or get ready for the junkyard.
The impact of the U.A.W. strike extends beyond in-house manufacturing, affecting suppliers, dealerships, and the livelihoods of countless workers and communities across the Midwest. According to a Wedbush analysis, a prolonged U.A.W. strike can permanently disrupt supply chains, hinder crucial component delivery times, and result in substantial financial losses. Detroit’s automakers, late by a decade, are committing $300 billion to E.V.s by 2030.
Ford plans to invest $11 billion, but they cancelled dealer stock orders of the 2023 F-150 Lightning to do quality checks. The Ford F-150 Lightning was the only viable E.V. shipped to date by the company. Recalling their best E.V. to date showcases the impact their aging manufacturing processes and facilities are having on their business. Furthermore, Ford’s «Model E» financial losses per E.V. sold are piling up. Adding to their discomfort, the construction of a $3.5 billion battery plant in Michigan is on hold due to licensing negotiations for Chinese battery technology. According to the Wall Street Journal, the future looks bleak for legacy automakers.
Similarly, G.M. aims to introduce twenty new EV models by 2023, with a lofty production target. G.M. aims to build one million electric vehicles (EVs) in North America by 2025, but the slow ramp-up of its three U.S. battery plants may restrict the actual E.V. production to less than 600,000 by mid-decade. The staggered start-up schedules and challenges in securing sufficient battery raw materials, despite having a combined annual capacity to supply at least 1.35 million EVs, might pose significant hurdles in achieving G.M.’s ambitious E.V. production targets.
To show flexibility, the U.A.W. commissioned a study outlining challenges and opportunities in manufacturing electric vehicles in the U.S. However, as E.V. powertrains get cheaper to manufacture with fewer workers, foreign competition and stricter emissions rules push demand for E.V.s higher, and legacy carmakers are forced to embrace modern technologies. The U.A.W. study warns of worker displacement, particularly with contracts moving to non-auto companies for certain parts. The labor-union-sponsored report also highlights a reinvestment opportunity in U.S. car manufacturing by retraining workers for EV part production, potentially creating new jobs.
However, key automaker execs and politicians continue to deliver uncertainty regarding the speed and extent of EV-induced changes to U.S. car manufacturing, making it challenging to reach a fair agreement. Kristin Dziczek from the Center for Automotive Research expects EVs to make up no more than 10% of sales until the late 2020s, with a significant manufacturing impact anticipated around 2030, when EVs might reach about 15% market share.
However, a newly published report by J.P. Morgan estimates that by 2025 the number of E.V.s is more significant than the Center for Automotive Research estimate. By 2025, E.V.s and hybrid electric vehicles (HEVs) will constitute 30% of all vehicle sales. Specifically, E.V. sales are expected to reach around 8.4 million cars, capturing a 7.7% market share globally. Meanwhile, HEVs are forecasted to significantly leap from 3% to 23% of global sales, translating to over 25 million vehicles.
In the U.S., overall E.V. sales, encompassing battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and hybrids, are estimated to account for over 38% of total sales by 2025.
E.V.s are heralded for their energy efficiency, converting over 77% of electrical energy from the grid to power on the wheels, significantly higher than gasoline vehicles, which convert only about 12%-30% of energy to wheel power. E.V.s offer environmental benefits by emitting no tailpipe pollutants, with the caveat that electricity generation’s environmental impact depends on the source, with nuclear, hydro, solar, or wind power being clean alternatives. Performance-wise, EVs boast quiet, smooth operation with more robust acceleration and require less maintenance than Internal Combustion Engines (ICEs). They also contribute to reduced energy dependence as electricity can be domestically sourced.
E.V.s face challenges like a shorter driving range, though improvements are noted, with some models achieving over 200 or 300 miles per charge and some premium models promising a 1,500+ range by 2035. Recharge time is another drawback, taking 3 to 12 hours for a full battery charge, and even a «fast charge» to 80% capacity takes 30 minutes. Additionally, E.V. batteries, designed for extended life, are expected to last 12 to 15 years in moderate climates, per a study by the Department of Energy’s National Renewable Energy Laboratory. Source: Fuel Economy
