UAW Applies Peer Pressure, Ford’s EV Investment Drop, Hertz Takes A Step Back

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It’s Friday and we’re talking about the new pressure on GM and Stellantis to reach a deal with the UAW. We’re also covering the reality check and big step back from EV rollouts from both Ford and Hertz. 

• The UAW's negotiation with General Motors takes a new turn as the union proposes a revised contract offer. This move comes on the heels of a promising tentative agreement with Ford, setting the stage for potential resolutions in the ongoing labor disputes.
  • The recent tentative deal with Ford promises a 25% wage increase over the next four years and the reintroduction of cost-of-living adjustments.
  • UAW President Shawn Fain said, "Ending the strike at Ford would pressure GM and Stellantis to also reach a deal." as he hopes to put pressure on both GM and Stellantis to finalize their own agreements.
  • Both GM and Stellantis expressed intentions to reach a swift tentative agreement with UAW, echoing their desire to resolve the labor standoffs.
  • Current GM and Stellantis offers suggest a wage rise of 23%, pushing top hourly wages above $40 by the contract's conclusion.
    
    
• Ford is making significant adjustments to its EV strategy and deferring around $12 billion in projected investments intended for new EV manufacturing facilities, noting a shift in North American consumer behavior and a reduced willingness to pay a premium for electric vehicles. 
  • This decision stems from the slower-than-anticipated growth rate of EV sales, despite the overall increase in the industry.
  • CFO John Lawler said, “"The customer is going to decide what the volumes are. Ford is able to balance production of gas, hybrid and electric vehicles to match the speed of EV adoption in a way that others can't."
  • He continued by highlighting that Ford isn't retracting from its upcoming EV models but will reconsider the speed at which they increase manufacturing capacity.
  • Ford's EV business unit, Ford Model e, reported a $1.3 billion operating loss in the third quarter, doubling its loss from the previous year, even with a 26% revenue hike

• Following lower than expected earnings, Hertz, is also rethinking their once enthusiastic shift towards EVs due to including higher repair expenses and a decrease in EV resale values, primarily influenced by Tesla's pricing strategies and parts availability. 
  • Hertz initially aimed to acquire a vast number of electric vehicles for its fleet. However, significant repair costs and diminished resale values, mainly due to Tesla's price cuts, have forced Hertz to adjust its trajectory.
  • The company remains "committed" to its previous agreement of purchasing 100,000 cars from Tesla and 175,000 EVs from GM. However, its goal of making EVs a quarter of its fleet by the end of 2024 appears unattainable.

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