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Shares of Tesla and Nio Rise After a Uaw Call Strike Lifts EV Makers

September 15, 2023
minute read

Shares of electric vehicle manufacturers experienced a widespread increase in trading activity on Friday, in response to the announcement of a strike by the United Auto Workers union at the facilities of the major legacy automakers known as the Big Three.

Tesla Inc.'s stock (TSLA) demonstrated a 0.5% rise, reaching a two-month high during premarket trading. The market recognized Tesla as a significant beneficiary of the labor disputes affecting General Motors Co. (GM), Ford Motor Co. (F), and Stellantis N.V. (STLA), which is the parent company of Chrysler.

In contrast, GM's shares experienced a 0.2% decline, Ford's stock decreased by 1.3%, and Stellantis shares posted a modest gain of 0.5%.

This strike coincides with the Big Three automakers' extensive efforts to establish a prominent presence in the electric vehicle market. However, the strike's potential for higher costs and production disruptions may undermine these endeavors if it persists. Notably, employees at these three companies already receive compensation approximately 38% higher than that of Tesla's nonunion workforce.

In a communication to clients, Wedbush analyst Dan Ives expressed concerns about the impact of an extended strike, stating that "If a strike is lengthy (4 weeks+), then ultimately production and the EV roadmap could be pushed out into 2024, and delays would be on the horizon at this crucial period [of EV execution] for GM, Ford, and Stellantis."

It is important to note that Tesla is not the sole entity poised to benefit from the UAW strike. The Global X Autonomous & Electric Vehicles exchange-traded fund (DRIV) saw a 0.4% increase ahead of the market opening, while S&P 500 index futures (ES00) declined by 0.1%.

Among other U.S.-based electric vehicle manufacturers, notable gains were observed, with shares of Nikola Corp. (NKLA) surging by 14.4%, Rivian Automotive Inc. (RIVN) gaining 0.5%, Workhorse Group Inc. (WKHS) adding 0.7%, Fisker Inc. (FSR) experiencing a 0.5% increase, and Mullen Automotive Inc. (MULN) advancing by 7.0%.

Additionally, electric vehicle manufacturers based in China also received a boost, with Nio Inc.'s stock (NIO) rising by 1.7%, XPeng Inc. shares (XPEV) increasing by 1.3%, and shares of Li Auto Inc. (LI) edging up by 0.2%.

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Cathy Hills
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Eric Ng
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John Liu
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Cathy Hills
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