About 13,000 U.S. auto workers represented by the United Auto Workers stopped making vehicles Friday, a move that could derail the adoption of electric vehicles and threaten the auto supply chain, analysts said.

Members of the UAW walked off the job at three assembly plants operated General Motors Co., Ford Motor Co., and Stellantis NV in Missouri, Michigan and Ohio at midnight Friday, after UAW and the Big Three were far apart in contract talks over union demands for significant wage increases, reduced working hours and other benefit improvements.

UAW leaders said the work stoppage that began at a handful of plants could expand to others and drag on for weeks or months until the Big Three meet the union's demands.

"These negotiations come at a time when the legacy auto industry is heavily investing in electric vehicles and is looking to cut costs to improve profitability in a competitive marketplace," Matt Portillo, analyst at energy research firm Tudor, Pickering, Holt & Co., said Friday.

Portillo said he expects General Motors and Ford to run out of their inventory supply in 55-60 days.

"With duration, lack of availability of new car supply could put upward pressure on pricing for new and used vehicles, a phenomenon that sparked inflation pressure over the past several years," he said.

Analysts also said that a prolonged strike or a deal to offer higher worker wages could put the Big Three automakers at a significant disadvantage compared to non-unionized automakers. If the assembly plants were to become idle or if wages rise by too much, the Big Three could be forced to delay their offerings and raise the price tags on their EVs, analysts said.

Evergreen Action, a climate advocacy group which promotes EV adoption, argued that EV transition is a "historic opportunity to raise auto worker standards, not lower them."

The group said that offering auto workers higher pay and better benefits is crucial to ensure a smooth EV transition. The move is also important to retain workers in other parts of the EV supply chain such as those working at battery plants, Evergreen said.

Alliance for Automotive Innovation, a lobbying group for most automakers in the U.S., did not respond to a request for comment.


This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.


--Reporting by Frank Tang, ftang@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

(END) Dow Jones Newswires

September 15, 2023 13:21 ET (17:21 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.
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