Electric Vehicle Adoption Could Cost Auto Workers

Contract Negotiations

Electric vehicles have been a focus of the car industry, but for workers in the industry the trend isn’t without perils.

The transition to electric vehicles and whether that will require fewer or more workers has been one of the biggest sticking points in union negotiations. The United Auto Workers Union — which represents roughly 400,000 active auto workers — has been locked in a very public stalemate with the Big Three automakers — General Motors (GM), Ford (F), and Stellantis (STLA) – while trying to finalize their new contract.

Until recently, many assumed mass manufacturing EVs would require fewer workers, because electric engines require fewer parts. But a recent study by Carnegie-Mellon University found that EVs might actually require more labor than combustion engines, due to the complexity of their batteries.

Job Risk

The Biden Administration has made it clear that a national transition toward EVs is a high priority. But there’s a risk that well-paying union jobs building combustion engines will disappear and be replaced by non-unionized and presumably lower-paying EV factory jobs. For automakers, the risk is that they will be forced to build EVs with a fully-unionized workforce, which will make it harder to compete with Tesla (TLSA) and other non-unionized rivals.

The battery is the most time-consuming component involved in building an EV. Ford and GM insist their newest battery plants aren’t covered by the national bargaining agreements, while the UAW is fighting hard to try to organize employees at these factories.

Driving Forward

As the EV transition continues, union workers want guarantees that they can keep their existing pay rates. But automakers need to keep their costs competitive and will only hire so many workers at a higher wage.

This stalemate could slow the rate of EV adoption, which goes against one of the Biden Administration’s biggest initiatives. Elsewhere, China — with its massive workforce of cheaper labor — is making great strides in the EV race. Heightened international competition may incentivize American businesses and workers to make concessions

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