First Gear: Alert! Deliveries via Cybertruck Are Beginning
Starting Monday, November 30, Tesla will begin shipping the Cybertruck that has been in the works for years. It’s not all positive news, either. Investor expectations have been moderated by CEO Elon Musk due to problems with his “radical” new product’s production ramp-up.
With more and more electric vehicles hitting the market, Austin, Texas-based Tesla is placing a great deal of importance on the Cybertruck, which is the company’s first new car in almost four years. For the business, the electric truck is seen as a genuine sales driver, albeit not to the same extent as the Model 3 and Model Y. According to Reuters:
Musk warned last month that it would take a year to 18 months for the vehicle to become a substantial contributor to cash flow, saying, “We dug our own grave with Cybertruck.”
The vehicle’s price will likely be disclosed during an event that starts at 3 p.m. ET (2000 GMT). Musk promised in 2019 that the vehicle would cost $40,000, but in spite of growing raw material costs, he has not provided an updated price.
…
According to the billionaire, Tesla is expected to produce about 250,000 Cybertrucks annually by 2025. With the Cybertruck, Tesla has encountered “enormous challenges in reaching volume production” because to its novel technology and design, according to Musk.
Experts warn that the unique, futuristic design and novel body material of the Cybertruck could alienate traditional pickup truck purchasers who prioritize practicality while also increasing production complexity and expenses.
Since its initial unveiling in 2019, the Cybertruck has been anticipated for a considerable amount of time. Though Musk hinted a few years ago that if people weren’t into it, he might construct “a normal-looking truck,” the design has remained fairly loyal to the concept.
Two years behind schedule, Cybertruck joins a competitive and lucrative pickup truck market that includes the Ford F150 Lightning, the Rivian Automotive R1T, and the General Motors Hummer EV.
Ford’s F-150 Lightning starts at roughly $50,000, whereas Rivian’s R1T has a starting price of $73,000.
Analysts predict that the Cybertruck will likely cost between $50,000 and a low of $70,000.
It will take a bit to process all of the more than one million reservations (at $100 a pop) that have been made for the Cybertruck thus far.
Second Gear: UAW Starts Large-Scale Organizing Initiative
One of the biggest organizing campaigns in history has officially begun, thanks to the United Auto Workers union. It is being done to capitalize on the significant benefits it witnessed from its recent labor agreements with the Big Three automakers, and it involves campaigns at 13 automakers in the United States. About 145,000 employees at those three companies are represented by the union. From the Wall Street Journal:
The UAW announced on Wednesday that it intends to strike almost 150,000 workers at American facilities controlled by major multinational automakers including Toyota Motor and Volkswagen as well as more recent producers of electric vehicles like Tesla and Rivian Automotive.
…
The massive organizing drives are an attempt to reestablish the union’s influence in the auto sector after firm restructuring and outsourcing weakened its U.S. footprint, and to add a substantial number of new members for the first time in decades.
The number of UAW members has decreased throughout the years, from a peak of over 1.5 million workers decades ago to about 400,000 now, including nonautomotive workers.
Although UAW President Shawn Fain has provided a general picture of the union’s efforts to organize nonunion automakers, the union officially revealed the extent of the endeavor on Wednesday. According to the union, more than thirty factories are involved in the organizing efforts.
As the union was getting close to provisional deals with the Detroit automakers, Fain declared in October that “when we return to the bargaining table in 2028, it won’t just be with the Big Three, but with the Big Five or Big Six.”
Following the Big Three agreement, several nonunion automakers, including Honda, Subaru, and Toyota, increased wages in an attempt to deter workers from organizing and to maintain their competitiveness in the labor market. Fain has encouraged employees at those automakers to think about trying to join the union, saying that the salary increases demonstrate the UAW’s strength.
Honda and Nissan representatives stated that their firms do not believe an independent party could enhance the working environment for their employees. Volkswagen, Toyota, and Rivian all declined to comment.
Over the previous ten years, the UAW has made fruitless attempts to unionize factories that are owned by Tesla, Nissan Motor, and Volkswagen. According to Harry Katz, a Cornell University professor of collective bargaining, many of those plants are located in southern states that are politically less friendly to organized labor.
This most recent organizing campaign coincides with a slight upsurge in support for organized labor. Alongside the UAW strike, there have been several well-publicized strikes by employees of casinos, healthcare organizations, and the entertainment sector.
Third Gear: Musk Claims That Unions Affect Moods
Tesla CEO Elon Musk, predictably, has a contrarian opinion about unions at his company. He said that the carmaker gives its workers good treatment and offers stock options that let line workers become managers or even millionaires. He sees no need for the UAW at his plants as a result. According to Automotive News:
At a New York Times event on Wednesday, Musk stated, “I think it’s generally not good to have an adversarial relationship between one group at the company and another group.” “It is the natural tendency of unions to incite animosity within an organization and establish a hierarchical hierarchy.”
On the other hand, Musk said that there is less hierarchy at Tesla facilities than other UAW plants because management and employees share a dining room and a parking lot.
According to Musk, “if Tesla becomes unionized, it will be because we deserve it and we failed in some way.” However, we make a concerted effort to guarantee everyone’s prosperity. Everyone is given stock options by us. Many individuals who were merely working the line and had no knowledge of stocks were turned into millionaires by us.
Over the past five years, the price of Tesla’s stock has increased over tenfold; yet, it has decreased dramatically from its peak in November 2021.
Musk’s remarks against unions are not new, but they do coincide with the UAW’s statement that it has initiated organizing drives at thirteen manufacturers.
Musk stated in a tweet from 2018 that the original Tesla Fremont factory was open to unionization. “But why give up stock options and pay union dues for nothing?” The National Labor Relations Board declared that the command had broken labor regulations after such action.
Fourth Gear: Ford Estimates $8.8 Billion for the UAW Contract
Ford stated that it expects to pay the United Auto Workers union roughly $8.8 billion for the new labor agreement, which will last for four and a half years. By 2028, that will add up to an average of almost $900 per car. For added that it lost $1.7 billion in revenue throughout the union’s 41-day walkout.
As a result, it is anticipated that adjusted earnings before interest and taxes will range from $10 billion to $10.5 billion. From the initial guidance of $11 billion to $12 billion, it has decreased slightly. According to Automotive News:
About 100,000 fewer cars were produced as a result of the work stoppage, according to Ford. Consequently, the business lowered its expected amount of adjusted free cash for the entire year by $1.5 billion, to a range of $5 billion to $5.5 billion.
Workers ratified the UAW contract earlier this month, which includes cost-of-living adjustments that will raise top pay to approximately $42 by April 2028 and 25% raises. The agreement also increases retirement benefits, shortens the time it takes for new staff to reach top pay, and requires $8.1 billion in manufacturing investment.
Ford stated that it was confident in its expansion plan, known as Ford+, despite the additional expense.
CFO John Lawler stated in a statement, “This industry is going through the biggest technology-led transformation we’ve ever seen and some companies, new and old, are going to be left behind.” “Ford+ is the winning approach – we have a very skilled staff that manages capital very well, ensuring that we execute consistently, produce robust growth and profitability, and are less cyclical.”
Ford has made $4.9 billion in net profits at $9.4 billion in adjusted EBIT over the first three quarters of 2023.
Ford made this announcement just one day after General Motors revealed comparable information. According to the report, the new agreement would raise costs by $9.3 billion, or around $575 per car. In GM’s estimations, a three-year agreement with the Unifor union in Canada was also included.
